Originally posted by Maslins
View Post
- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
Collapse
You are not logged in or you do not have permission to access this page. This could be due to one of several reasons:
- You are not logged in. If you are already registered, fill in the form below to log in, or follow the "Sign Up" link to register a new account.
- You may not have sufficient privileges to access this page. Are you trying to edit someone else's post, access administrative features or some other privileged system?
- If you are trying to post, the administrator may have disabled your account, or it may be awaiting activation.
Logging in...
Previously on "Employment Allowance -- Easy to Get Around the New Restriction?"
Collapse
-
Far easier solution is for them to stop introducing daft things like the employment allowance in the first place.
This new situation is exactly why the tax legislation is so ridiculously unwieldy as it is:
- have fairly complex rules to start with,
- introduce an allowance,
- decide that allowance is being used by some people you don't want to use it,
- put in some clause to attempt to stop it,
- people do a few artificial things to get around that clause,
- Osborne gets annoyed so puts in further clauses to stop those,
- this repeats a few more times, until the govt moan about the disgusting abuse by the taxpayer.
It's all BS and is so boring to see it happen time and time again...but it'll continue to repeat itself with new "bright ideas" from those in power.
For people like me, it means having silly conversations with lots of clients about whether they should employ their brother/daughter/mate/whatever on some trivial salary. I really want to be able to say no...but when the tax law is so cuffing crap that doing so saves them a few hundred pounds, what am I to do.
Leave a comment:
-
I've always been quite impressed with how easy it is to calculate income tax in the UK compared with the States, where withholdings are nearly always wrong and you file a return and either owe or are owed. Yet the NI is this more obscure thing where you can use multiple online calculators and get multiple answers...
Leave a comment:
-
NI is simply a vehicle for saying "hey, we have low personal taxation of just 20%", cunningly avoiding mentioning NI as the other compulsory tax on employment earnings (and not to mention employer NICs).
It is rather like an airline 'carrier imposed surcharge'.
I suspect the reality is that HMRC loses far more revenues from contractors who don't bother with any of that tax stuff than from contractors who pay themselves in dividends plus a token salary and using EA to minimise the employer NICs. However, it is probably easier to come after those who are legally avoiding tax through tax planning but reporting things in CT and SA returns than to detect those who are evading tax altogether.
Leave a comment:
-
Employment Allowance -- Easy to Get Around the New Restriction?
One-person company NI relief ban 'open to abuse'
George Osborne’s attempt to block one-person businesses from claiming the National Insurance Employment Allowance is going to be “too easy to dodge,” tax experts warn.
But the planned removal will be easily avoided using one of two workarounds. Firstly, by appointing another director, such as a friend or spouse and paying that person a token wage.
Only the tax savvy are going to be interested in their alternatives, and the tax savvy are paying themselves mostly in dividends. We are not talking a lot of money. And if the tax-savvy have a spouse/partner they trust enough to make them a director, they probably already did it.
But there's another work-around:
However there is another potential loophole in the government’s proposal and it relates to how payments are made, warns CIOT tax policy director John Cullinane.
“The exclusion is also open to abuse in that making a single payment after the director has resigned would seem to enable the company to escape the exclusion and hence qualify for [the] EA,” he said. “That former director could then even go as far as getting themselves re-appointed as director of the same company.”
There's a better solution. Since anyone who knows what they are doing is going to restrict their salary, at the very most, to their tax-free allowance, the obvious solution to the whole thing is to stop pushing the tax-free income allowance further and further away from the NI thresholds, and instead bring the NI thresholds up. Every increase in the NI thresholds is helping the low-paid, as much as increasing the tax-free allowance does. In fact, increasing the allowance further does nothing for those making between £8-12K. So freeze it and increase the NI thresholds every year until they catch up. Then, there's no incentive for people to do creative and bizarre things to get around the new restriction.
But no, that wouldn't make sense, because it would make the tax environment simpler and easier to understand. It's much better to have complicated rules, varying thresholds, etc, etc.Tags: None
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Leave a comment: