Reply to: A taxing solution

[Rebecca Loos]

I don't think anyone contracts just for the money but surely it is in the top 3 of factors for most contractors. For me, it is definitely number 1 even if not 100% of the contributing factors.

[Dundeegeorge]

Yes indeed, haste the day.

But then do most people contract just for the money?
That might well be a motivating factor, but it's certainly not the only one.

[Rebecca Loos]

DundeeG, you are not wrong - I hastily listed expenses whereas it had no place there.
But currently dividends get taxed at a different rate of tax than straight income, doesn't it? Based on the fact that they don't attract NI contributions. So considering that NI contributions are a kind of tax, what I meant is that a flat rate tax (applied properly) would eliminate the discrepancy between dividends and salary, and therefore the option of going contracting as opposed to permie would be less attractive from a financial point of view only (other + points still apply, like freedom etc.)

[BobTheCrate]

I always used to believe that for a tax system to be fair, it needed to be flexible and therefore by that definition, complex.

That may well still be true.

Such a shame that disingenuous Tax and Governmental authorities take advantage and abuse such a well meaning system inorder to help themselves to significantly more of our money than they're entitled to.

[Churchill]

you're not too bright are you, either that or you believe the IR.
Your company is not you, got that, your company is not you.
Flat-tax-rate would apply to any salary paid to you.
Your company is not you. You are not your company.
Any salary paid to you (not your company) by your company (not you) would incur the flat-rate-tax.
Any business expenses incurred by your company (not you, you are not your company) would still come straight out of the books as expenses, which might mean that your company (not you) might have to pay you (not your company, but you) a decreased salary, but that decreased salary which your company (not you) pays you (not your company) would then be taxed at the flat-rate.
Of course if you're just staying in the country and avoiding paying any income tax anyway, it's hardly got anything to do with you, has it?

DG, I think you'll find that RL uses her company account as her own, including any monies that should be destined for the HMCoT & HMC&E.

Give it time, she'll come a cropper.

[zeitghost]

And he said that before Gay Gordon started making it more complex than quantum physics.

[AlfredJPruffock]

"The hardest thing in the world to understand is the income tax."

Albert Einstien

[Dundeegeorge]

Oh dear oh dear oh dear

you're not too bright are you, either that or you believe the IR.
Your company is not you, got that, your company is not you.
Flat-tax-rate would apply to any salary paid to you.
Your company is not you. You are not your company.
Any salary paid to you (not your company) by your company (not you) would incur the flat-rate-tax.
Any business expenses incurred by your company (not you, you are not your company) would still come straight out of the books as expenses, which might mean that your company (not you) might have to pay you (not your company, but you) a decreased salary, but that decreased salary which your company (not you) pays you (not your company) would then be taxed at the flat-rate.
Of course if you're just staying in the country and avoiding paying any income tax anyway, it's hardly got anything to do with you, has it?

[zeitghost]

"Only little people pay taxes" as someone once said.

Shortly before ending up in clink.

[The Lone Gunman]

I think the point of this thread is to highlight the fact that if there was a flat-rate tax on everything, say 20%, then whether you work as a contractor or not, you'd be taxed exactly the same: takehome = gross * 80%
So not possibility to cheat, reduce or otherwise avoid (legally or not). No dividend vs salary, no expenses, nothing.
So let's thank the great UK Treasury for keeping complicated rules , exceptions and exemptions, that allow us to get better returns than PAYE employees!!

Beccs you are a naughty girl, go to my room!
Some of us dont want to have to "hide" from the tax man. Some of us want to see parity across the board.
I still bet that the mega rich find some way of avoiding it altogether.

[Rebecca Loos]

I think the point of this thread is to highlight the fact that if there was a flat-rate tax on everything, say 20%, then whether you work as a contractor or not, you'd be taxed exactly the same: takehome = gross * 80%
So not possibility to cheat, reduce or otherwise avoid (legally or not). No dividend vs salary, no expenses, nothing.
So let's thank the great UK Treasury for keeping complicated rules , exceptions and exemptions, that allow us to get better returns than PAYE employees!!

[Dundeegeorge]

Oh please

How do you get away without declaring an income on which you would be taxed? You can't take everything as dividend FFS.

[Rebecca Loos]

no, those of us who avoid it!
Contractors, like

[Dundeegeorge]

Bad news for whom?

Those of us who are actually paying income-tax, do you mean?

[Rebecca Loos]

I hope not.
This kind of simplified flat-rate schemes would be very bad news for all of us!