Budget 2015 - get angry, get active

[DonkeyRhubarb]

Realistically, protesting is a waste of time. Been there, done that, got the t-shirt.

If the Government has decided to do something, then 99.99% of the time it will get its way.

[mulberryblue]

After first £43000 next year, every limited company will be giving away 52.5% in taxes. [emoji3]

Can you explain this statement please

[chubacabra]

Can you explain this statement please

I assume 20% corp tax and 32.5% tax on higher rate dividends

[MicrosoftBob]

The first (and possibly most difficult) thing is to get into contractors' brains that we must become a WE if we want to have any voice and control over our destiny as professionals... Feels like trying to empty the ocean with a teaspoon sometimes

If only there was some sort of contractors union to fight our cause

[eek]

I assume 20% corp tax and 32.5% tax on higher rate dividends

Isn't that wrong.

You pocket 80% * 67.5% so 54% of the amount and pay 46% tax. Previously you pocketed 80%* .75% or 60% of the company's income. So it's worse but not horrendously so

[mudskipper]

If only there was some sort of contractors union to fight our cause

Wasted an opportunity to post your MGM code. Slacker.

[dangerouswhensober]

Isn't that wrong.

You pocket 80% * 67.5% so 54% of the amount and pay 46% tax. Previously you pocketed 80%* .75% or 60% of the company's income. So it's worse but not horrendously so

Yes - I'd agree - worse, but not horrendously so.

There's a table showing the decrease in dividend income under the new proposals here:
How much will the April 2016 dividend tax changes cost you?

Here's my rough calculation:

Assume £400 per day for 230 (*) working days:

2015/16 2016/17
Gross Income = £92,000 £92,000
Salary (tax free) -£10,600 -£11,000
======= =======
Corp gross available: £81,400 £81,000
Corp tax @20 % -£16,280 -£16,200
======= =======
Net dividend: £65,120 £64,800
Personal tax on dividend -£ 9,128 -£11,435
======= =======
Dividend after all tax: £55,992 £53,365
Plus tax-free salary +£10,600 +£11,000
======= =======
Total income £66,592 £64,365
Total Income per month ~£ 5,550 ~£ 5,365

(365 days in year - 104 weekends - 8 bank holidays - 20 days vacation - 3 sickies = 230 working days)

Note: This is a "back-of-an-envelope" calculation - ignores company and personal NI contributions.

[Tass1968]

Like this, you mean?

Absolutely - but the issue is finding a way to disseminate the 'new' message. There are some glaringly obvious statistics that tell us that the wrong message is being played to galleries. I've sent emails to both the Telegraph and Times and to HMRC pointing out these statistics, but all without reply.

For example, total government tax take as a percentage of GDP has been between 34 and 36% for 40 years. Total personal taxes takes as a percentage of overall national income averages around 42% over the last 340 years. The current figures are 36% and 41.5% respectively. So there is no tax gap, there is only an overspend (and look no further than the ringfencing of pensions and health spend to see the real problem).

Also, and I'm sure this is familiar to every contractor, but compare a contractor on a £400pw rate, with a permie on a £55K pa salary (this is generally a like for like comparison). You find that the tax take is about £300-£400 difference. So, do HMRC really believe that every contractor moving from contract to permie will take the contractor rate with them? Because by making contracting financially untenable, that's the only way this will increase tax take.

[DotasScandal]

If only there was some sort of contractors union to fight our cause

BIG GROUP's your champion. You're very welome to join (read THIS).

The problem (and the reason it all got that far) is the contractor mentality, which is largely an "all against all" one, and permeated with the constant insistence on "doing one's own thing" instead of unionizing (whatever the form). This will be the contractor's downfall IMO.

[webberg]

The post from "dangerous" is pretty much correct.

There should be a recognition of the fact that from April next, many expenses currently tax free (i.e. they go from client to ltd co to you without a charge), mainly travel and subsistence, are likely to become taxable.

My own calculations indicate that (if certain assumptions are correct), the take home from an efficiently structured ltd co will fall by around 3% to 4% in 16/17.

I do have a calculator which is relatively detailed and pending some checks on my Excel skills (rusty) and some basics, I'm pondering the best route to release it.

There was also a mention above of tax motivated incorporation and dividends. I think the poster was suggesting that these were the same. Quite possibly. However the Red Book discusses changes to dividend tax (not an increase in income tax which ruled out in the Tory manifesto) and TMI as separate issues.

My fear is that either individuals will not be able to use a limited company to sell their services in certain situations (IR35?) or that it will not be possible to leave funds in a ltd company (where CT has been paid) and withdraw it later paying CGT perhaps (subject to ER) and no NIC.

i hope I'm wrong and poster above is correct.