2022 mini-budget discussion

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Ahleckz said:
...If you pay lots of tax, you have lots of money. There’s no two ways about it!...
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There are many ways about it. It's called disposable income. You can have someone on minimum wage who lives at home with parents with more disposable income than a high rate tax payer in London who has to pay for childcare and a 3 bed flat. Just because they earn 100k does not mean they are rolling in it necessarily.
 
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jaybee said:
There are many ways about it. It's called disposable income. You can have someone on minimum wage who lives at home with parents with more disposable income than a high rate tax payer in London who has to pay for childcare and a 3 bed flat. Just because they earn 100k does not mean they are rolling in it necessarily.
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If a person on 100k is struggling then they should take the advice you lot like to peddle, live within your means!
 
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jonneymendoza said:
Your limited company buddies are liying to you if they go on and say they pay less tax then you....

They dont. i have highlighted this why. corporation tax....

plus personal tax which is teh same tax rate as a PAYE....

Yea if youre mates dont take out more than 12k out of there company then yea they pay next to no tax but who can live off on 12k + 7k base salary (lol)

People wih limited companies are pay a **** load of tax and my point is, for what?
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Should you count corporation tax though? And its on your Company's profits after capital allowances. Some businesses pay zero corporation tax if they have invested in a lot of new equipment that year even though they have made a good profit. You only pay tax on what you decide to withdraw from the business to yourself personally.

Plus you arent taxed the same as PAYE people either. You get an extra £2000 tax free on top of your £12,500 personal allowance and then the rates are as follows to take account of the corporation tax already paid.

Basic-rate taxpayers pay 7.5%
Higher-rate taxpayers pay 32.5%
Additional-rate taxpayers pay 38.1%.

And you aren't paying any NI like a PAYE person does.

Every accountant will tell you that its a much more tax efficient way of paying yourself by dividends than PAYE. If it wasnt then people with limited companies would pay themselves through PAYE wouldnt they?

Any company owner telling you that they are paying more tax than PAYE people are just lying.

Example here showing even accounting for corporation tax, even on £30k, the tax saving to the person is £7k per annum over somebody paid that £30k through PAYE.

Jane takes a salary of £9,100 (keeping below the threshold for paying both employer and employee NICs and income tax) and takes a further £30,000 in the form of a dividend. Her total income is now £39,100. She has a tax-free personal allowance of £12,570 in 2019/20, leaving £26,530. Her dividend allowance means the first £2,000 of dividends are tax-free, leaving £24,530 that is taxable.

This £24,530 is taxed at the dividend basic rate of income tax, which is just 8.75 per cent. So Jane’s income tax bill for the year will be £2,146.38.

If Jane had taken the whole £39,100 as salary, then her income tax bill would have been 20 per cent of £26,530 which is £5,306. She would also have to pay over £3,603 in employee NICs.

By taking her income in a combination of a low salary plus dividends, Jane has saved almost £7,000 in that year.

Also note that the company would have to pay employer NICs on her salary, coming in at £4,515. However, this will be offset to some extent by lower corporation tax
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diamount said:
If a person on 100k is struggling then they should take the advice you lot like to peddle, live within your means!
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It's an extreme example, but the point stands. Just because you see 100k as a lot, does not mean they own two new cars on the drive and waste cash on pointless stuff. Housing and childcare costs a bomb. You can't just say if you pay loads of tax you have loads of money. You may EARN loads of money in your opinion yes, but disposable income may be much less.
 
jaybee said:
It's an extreme example, but the point stands. Just because you see 100k as a lot, does not mean they own two new cars on the drive and waste cash on pointless stuff. Housing and childcare costs a bomb. You can't just say if you pay loads of tax you have loads of money. You may EARN loads of money in your opinion yes, but disposable income may be much less.
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And it depends where you live. In London, to live comfortably with a child and a typical 2/3 bedroom 90sqm house or flat, you need close to 200k salary combined
 
jonneymendoza said:
It depends how much u take out from dividends
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It will always be less even if you are taking a million pound a year out. The personal tax you get charged is at a lower rate which has been adjusted to take account of the 19% corporation tax your company has been charged but you aren't paying any personal NI and the company isnt paying any employers NI (which offsets the corporation tax)

Granted the personal NI savings does reduce as you earn more as its only 13.25% up to £50,284 and then only 3.25%

But give me any figure you and I will show you that overall you pay less tax. Why else are you paying yourself dividends and not PAYE if you didnt pay less tax overall?
 
Uther said:
So how do the people who live there on minimum wage live? You're in a very priviledged position, and I'm not sure you realise that...
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Usually house sharing, renting or with some kind of support if on the minimum wage (or even the London living wage).
 
Uther said:
So how do the people who live there on minimum wage live? You're in a very priviledged position, and I'm not sure you realise that...
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I doubt they live comfortably... Just because some people live on a lot less doesn't mean that someone earning more than them might need more again to live 'comfortably'.

It's a very subjective word too, with all sorts of subjective assumptions around location and house size etc, so can see why it keeps causing these sorts of arguments.

Fwiw I think a combined wage of £60k, or £80k with 2 kids would be my 'finger in the air' measure for living 'comfortably' in a niceish part of Warrington :p. And yes it's entirely arbitrary how I've decided that :p.
 
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jaybee said:
It's an extreme example, but the point stands. Just because you see 100k as a lot, does not mean they own two new cars on the drive and waste cash on pointless stuff. Housing and childcare costs a bomb. You can't just say if you pay loads of tax you have loads of money. You may EARN loads of money in your opinion yes, but disposable income may be much less.
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Maybe much less but hardly a struggle though is it when 75% of people earn less than £40k per annum in the country. But you are right to a degree. When I had my first job and I was living at home with my parents and paying the £25 per week for full board and lodgings with my washing and all my food paid for, it was another 15 years before I had the same disposable income again.
 
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