The official Budget 2017 DOOM thread

[northernladyuk]

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

Clients do, and they pay the (market) rate, and they also pay for kit for employees.

[tomtomagain]

the absolute silence on both sides of the house when this section of the budget was given was telling.

Yup. That was the reaction as most of them realised they're personally being hit.

[quackhandle]

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

Which would hit almost all IT contractors.

I'm making a claim for the £300 million hardship fund.

qh

[jamesbrown]

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.

Agreed. I've personally never been persuaded by the argument that flexible working should accrue a major tax advantage; any advantage should be codified, and the current advantage has arisen inadvertently over time through an unnecessarily complex tax system. My argument with HMG stems, on the one hand, from their abject failure to address that complexity (preferring tinkering reforms instead) and, on the other hand, their intention to have cake and eat it w/r to flexible working in the PS, i.e. wanting contractors, but not wanting to pay for them.

[MrMarkyMark]

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. 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?

Ah yes, but when you have people on here like d000g, who is a contractor suggesting we pay too little, you can understand others reaching that conclusion.

[PurpleGorilla]

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.

The worker on £60k p.a. doesn't have the balls to contract and is a wage slave to an expensive mortgage and private hire car lease.

[LondonManc]

Labour grumbling about it being a complacent budget.
Who's fault is it that the Tories can be complacent? Oh yeah, the Green Party. Oh, wait.

[BolshieBastard]

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?

Well said. The same old muppets here like marky mark (ooh, Im back to a 2 contractor income, dont you know?) and dhooog whatever keep trotting their same old tulipe.

[MrMarkyMark]

Well said. The same old muppets here like marky mark (ooh, Im back to a 2 contractor income, dont you know?) and dhooog whatever keep trotting their same old tulipe.

Bolshie, you grumpy old get.
Welcome back!

I would like to say you have been missed, but you haven't really

[lucyclarityumbrella]

Detail time : https://www.gov.uk/government/upload...t_2017_web.pdf