The official Budget 2017 DOOM thread

[PurpleGorilla]

Why should this difference be reflected in the tax system, rather than in the rate?

Because most people don't get it. (It being that contractors pay all this stuff themselves).

[d000hg]

I agree with the sentiment, people seem to forget the bottom line cost difference between hiring a permie and a contractor isn't that much

That seems line contractors use. Along with "we don't earn much more than permies because of holidays, sick-pay, bench-time"... I just don't think it's true for anyone decent at what they do. I certainly couldn't get a salary that would make that the case.

[d000hg]

Can't stand Hammond, he looks like a (failed!) maths teacher who would struggle to control a class full of 11 year olds.

qh

A bit dull. But he is basically just delivering the report not crowing about it like Osborne. A Chancellor shouldn't be particularly entertaining really

[northernladyuk]

It isn't so much about whether it should or should not, it's that it was never codified. In examining this formally, they've decided that there shouldn't be a major tax advantage of flexible working, which is fine, but they need to implement it in a sensible way, and they show no indication of doing this.

Except the comment was in response to 'How is that fair?' In terms of fairness, the ability of a married Ltd Co. contractor on £500 pd to pay low salary, CT, divis and to income split with spouse while finessing Child Benefit doesn't look particularly fair to the worker on £60k p.a.

Of course you are right that it is a complete mess and changes will probably be defined and implemented poorly, and in the meantime everyone should continue to maximise the advantages of the Ltd Co. structure. It would be nice to think someone will put into place a new structure for the v. small Ltd with perhaps a meaningful voluntary NI contribution to offer some protection as well, but let's not hold our breath.

[MrMarkyMark]

That seems line contractors use. Along with "we don't earn much more than permies because of holidays, sick-pay, bench-time"... I just don't think it's true for anyone decent at what they do. I certainly couldn't get a salary that would make that the case.

Funny............its exactly the line senior people at multiple Client Cos have told me.

In fact my old man who worked in construction said for many years that to employee someone actually costs double compared to engaging them as self employed.

[barrydidit]

Here comes Jezza

[mall]

Business rates

Did anyone else hear him mention business rates for digital working i.e no premises??

Which would hit almost all IT contractors.

[barrydidit]

Here comes Jezza

Sounds like he's pissed

[TheCyclingProgrammer]

I realise I'm preaching to the choir here but where has this perception that incorporating gives us all magical tax savings compared to the employed?

Somebody on a salary of £43k will pay £6400 in income tax, plus national insurance. There's also the hidden cost of employers NI on top of this for the employer. That gross salary and the employers NI will reduce the employer's corporation tax bill.

In order to pay myself a gross income of £43k, an £8k salary and £35k in dividends, I have to turnover £51,750. On this I will pay £8,750 in corporation tax on gross profit of £43,750, leaving me with £35k net profit to take as a dividend on which I will pay an additional £2025 in dividend tax, giving me a net income of £40975 and a total tax contribution of £10775. Corporation tax will reduce slightly from April but dividend tax will go up by £225 from next year.

Of course we have the advantage of keeping profits in the company for a rainy day and yes, one day we may gain a tax advantage by liquidating (looking less likely all the time). But most of us keep chunks of money in our company as a warchest to account for the fact that if we don't have a contract/gig, we aren't getting paid! We can also lump some of it into a pension but we'll pay tax on that eventually.

Some of us do gain a tax advantage by splitting the profits with our spouse but in reality this is only a viable tax saving measure if your spouse doesn't already earn a significant amount of money and the reduced dividend allowance makes this much less attractive an option for those whose spouse is an earner. Those who benefit from this the most are those who don't have a second household income in the first place.

Oh, and if we do need the extra money and take dividends at the higher rate, we're paying an effective tax rate of 46% when you add the CT and higher rate dividend tax together. Fair?

As for the self-employed, well much of the same arguments apply. They don't even have the advantage of saving up profits without paying higher rate tax but all the same downsides to working for themselves.

Sorry, but this just pisses me off. When did small businesses and the self-employed become the problem?

[quackhandle]

A bit dull. But he is basically just delivering the report not crowing about it like Osborne. A Chancellor shouldn't be particularly entertaining really

Indeed he definitely has the "Major" about him?

More peas, dear?

qh