Reply to: There be an ill wind a-comin our way

[russell]

Any tax change that reduces my income will be passed on to my client

[ASB]

The investment income surcharge of 15% existed between 1974 and 1984 (ish). At the time NI (ee and er) was capped. Overall taxation on unearned income was higher accounting for the NI cap.

Obviously those in charge of their remunerations then decided paying as either salary or dividends was ineffective; and didn't pay out. So enter the close company deemed distribution rules. These have the effect of limiting the amount that could be retained as working capital, anything in excess of that was taxed on the company as if it had been distributed.

There has been quite a lot of noise for a few years about the general principle of this avoiding the full gamut of taxes and NI.

Looks like it may be back on the agenda - again.

[AtW]

When I looked at relocating and contracting in Ireland, the CT + divs model is unattractive, simply because IIRC divs are taxable as income (subject to income tax at normal rates - can't remember the position on the NI equivalent). If the govt here was serious about destroying our model, they would do this.

Should have used "double dutch" to get all money virtually tax free, fool

[Platypus]

Downside is that people finally see how much tax they are really paying

^ This is why it will never happen.

TORIES INCREASE BASIC RATE INCOME TAX TO 32%

[DirtyDog]

What would be interesting would be to know how much money this would raise (after the new avoidance industry of course), and what corresponding decrease could be made in the overall rate of New Income Tax vs Current Employees NI + Income Tax? If it is substantial, it could easily be a vote winner.

You could see how big business would like the idea - shift all the NI onto the staff, but neglect to give a matching pay increase. Any changes to NI levels would be met by the employee not the employer.

Downside is that people finally see how much tax they are really paying.

In opposition there was a pledge to cut the red tape in the tax system, and this would do it in one quick step. Then they could cut the staffing levels at HMRC or redeploy them to look at fraud and evasion. However, what is said in opposition counts for nothing (particularly if it's a personal pledge signed by the candidate that they would NEVER do something)

[VectraMan]

When I looked at relocating and contracting in Ireland, the CT + divs model is unattractive, simply because IIRC divs are taxable as income (subject to income tax at normal rates - can't remember the position on the NI equivalent). If the govt here was serious about destroying our model, they would do this.

WHS. They could make life much easier for small business by allowing any small, UK owned business to forget about CT and annual returns and just have the shareholders pay the full income tax on divs. It would solve IR35 overnight, and mean we wouldn't be stuck having to pay accountants, lawyers or other leaches.

But I know most of you would rather have the insane complexity and the uncertainty that it generates so you can sort of maybe get away with a bit more cash.

[Old Greg]

Consolidate all income into one pot and tax that. Scrap NI completely, and add that to income tax, so there's absolutely no incentive to incorporate.

Doesn't deal with the big corporate evaders, but it would hammer many other businesses.

Not a vote-winner, though - even by the scale of the pasty tax and the granny tax, Osborne wouldn't be daft enough to go that far.

What would be interesting would be to know how much money this would raise (after the new avoidance industry of course), and what corresponding decrease could be made in the overall rate of New Income Tax vs Current Employees NI + Income Tax? If it is substantial, it could easily be a vote winner.

[Mich the Tester]

But they'll just have to define PSCs more tightly. What is 15% of my business is selling software that I develop and the other 85% consultancy?

That's an avoidance measure.

HTH

Love

Hector

[DirtyDog]

But they'll just have to define PSCs more tightly. What is 15% of my business is selling software that I develop and the other 85% consultancy?

You're thinking too narrowly - make it impact all businesses, and the personal element is irrelevant. Simple.

[DirtyDog]

When I looked at relocating and contracting in Ireland, the CT + divs model is unattractive, simply because IIRC divs are taxable as income (subject to income tax at normal rates - can't remember the position on the NI equivalent). If the govt here was serious about destroying our model, they would do this.

Consolidate all income into one pot and tax that. Scrap NI completely, and add that to income tax, so there's absolutely no incentive to incorporate.

Doesn't deal with the big corporate evaders, but it would hammer many other businesses.

Not a vote-winner, though - even by the scale of the pasty tax and the granny tax, Osborne wouldn't be daft enough to go that far.

[Old Greg]

I've heard this discussed by the likes of Hodge. However, as they have put a lot of resource into ir35 recenty i'm not sure they will do anything too blunt. However, the screw is being tightened. At some point in the future I see all PSC's being treated as being within o
Ir35.

But they'll just have to define PSCs more tightly. What is 15% of my business is selling software that I develop and the other 85% consultancy?

[GB9]

When I looked at relocating and contracting in Ireland, the CT + divs model is unattractive, simply because IIRC divs are taxable as income (subject to income tax at normal rates - can't remember the position on the NI equivalent). If the govt here was serious about destroying our model, they would do this.

I've heard this discussed by the likes of Hodge. However, as they have put a lot of resource into ir35 recenty i'm not sure they will do anything too blunt. However, the screw is being tightened. At some point in the future I see all PSC's being treated as being within o
Ir35.

[BigTime]

When I looked at relocating and contracting in Ireland, the CT + divs model is unattractive, simply because IIRC divs are taxable as income (subject to income tax at normal rates - can't remember the position on the NI equivalent). If the govt here was serious about destroying our model, they would do this.

Canada has the same system where the only benefit of paying a dividend is you don't make the contribution to the additional pension. This like your basic stamp in the UK is desirable.

[Old Greg]

An ill wind?

That'll keep all those useless windmills turning then.

And I wouldn't fancy being stuck in a meeting with doobab, either.

[Old Greg]

When I looked at relocating and contracting in Ireland, the CT + divs model is unattractive, simply because IIRC divs are taxable as income (subject to income tax at normal rates - can't remember the position on the NI equivalent). If the govt here was serious about destroying our model, they would do this.