Dividends beyond £5k taxed wef 2016!!

[Jog On]

Seems they really have gone after contractors this time with the dividend change and the expenses...

Surely we aren't the only people who get paid largely in divis? How do "the rich" pay themselves?

[SpontaneousOrder]

FTFY.

Screwing without consent is rape.

ALthough, I'm not sure what 'effectively screwed/raped me' is supposed to mean

Metaphorically maybe. Although 'robbed me' might be better.

[unixman]

Contrary to popular belief among permies (and some contractors), contractors on the low salary model don't pay significantly less income/divi tax than permies. Your corporation/income/divi tax adds up to about the same as permy income tax. Where we do save however is in the avoidance of NIC payments, due to our salary being low (circa 10k).

On their own, the new divi rates would mean our corp/income/divi tax will be more than a permy. However that will be offset by the decrease in corporation tax of 2% - affecting all your dividend - and the avoidance of NICs will likely continue to be the biggest factor, meaning the low salary/high dividend model will continue to be the best.

Probably.

[northernladuk]

Seems they really have gone after contractors this time with the dividend change and the expenses...

Surely we aren't the only people who get paid largely in divis? How do "the rich" pay themselves?

Can't help thinking they will make a lot more from corporate bods than us on this one. Not so sure this was totally aimed at us.

[unixman]

Oh and don't forget to pay the highest allowable dividend next March!

[NotAllThere]

...
The only hope is that people will be put off going contracting now and rates will rise to compensate...

That was said when IR35 came in. Guess what? Didn't happen.

What's made contracting attractive to most people seems to be the increase in take-home pay, coupled with increased independence. Not the ability to reduce the percentage of tax paid on overall income.

I certainly pay more tax than I would as a permie in Switzerland. But my net income is nonetheless way way higher. (Currently undergoing a tax investigation... so it's not safe here. OTOH, my accounts are clear of anything remotely dodgy).

[d000hg]

After 5 years as a contractor this is the worst news I have come up against. Damn those tories, they have hammered everybody except the rich.

Um, contractors who will be substantially affected by this ARE the rich - or at least the top few % of earners. You maybe forget what most people earn.

Jesus/Mohammed/Dalai Lama Almighty.

CUKer discovers the old 'unintended consequences' thing.

This is a consequence of legislation enacted in a bid to stop VAT and Tax scams by typically building/engineering tradespeople in the 70's.

Branson started a business, running through a company. Contractors create a company but are not a business.

You are only a real business if you start with £x,0000 capital and employ more than how many people?

Branson started in a phone box and record listening booth.

I didn't say that. But Branson started a company and grew it, he wasn't using a company vehicle to supply personal services... he wasn't earning 100k selling stuff on his own.

[Guest]

Oh and don't forget to pay the highest allowable dividend next March!

That is exactly what I am going to do.

Found a simple tax calculator here.

2015-16 Salary and Dividend Tax Calculator

[tractor]

...

Um, contractors who will be substantially affected by this ARE the rich - or at least the top few % of earners. You maybe forget what most people earn.

I didn't say that. But Branson started a company and grew it, he wasn't using a company vehicle to supply personal services... he wasn't earning 100k selling stuff on his own.

I did say I don't want to be Branson. But why should anyone who takes the risk and suffers the disadvantages of not having regular bigco employment not be afforded the same advantages as any other company/director?

[kingcook]

Oh and don't forget to pay the highest allowable dividend next March!

Already paid the best divi (keeping out of higher tax rate) on 6th April 2015