Spring Budget 2017
- Thread starter Mr Jack
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If you're self employed you don't get a wage, you get profits, so any figures for wages are basically irrelevant.
And the reason to tax them more is just that there is a disparity in rates, although it's arguably not unreasonable given that if you're self employed you're basically screwed for statutory sick/maternity pay.
Yes, I am a bit to be fair, but that being g said Hammond talked about the two of them in the same breath and there are changes that will hit both of them.
It's what they say every time. Then the opposition wheel out alternate figures about how everything is terrible.I find the bright future forecasts amusing; by 2020 GDP is up, inflation is down, borrowing is half what it currently is and debt is falling.
Isn't that what said 3-4 years ago
It was kitch that's particularly confused me about laying off one of his employees to pay the additional tax, so neither a 1man band or presumably self employed.
Soldato
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Yes, so is he suggesting this national insurance 'fix' was to hit contractors, rather than sole traders? As it looks very much to hit both.
Going to be stupid now and ask, what national insurance do the 'self employed' contractors pay currently? As generally they would be PAYE from their own company to a limit, and then above that its all dividend profits? Do they generate any national insurance from the company profits?
I am aware that as a sole trader I pay tax and national insurance on my 'profits' as if it were simply my wage. So the brackets, bands and allowances all apply.
How are contractors assessed for Ni currently?
You pay normal employee NI plus also employer NI payments on a PAYE salary, though the ones that sail close to the wind will take a salary that's below the threshold for paying both, whilst still accruing the 35 years stamps required for a pension. The rest of the income after costs (so profit) will be taxed at the corporation tax rate of 20%, what's left over can then be taken as a dividend at what ever dividend tax rate.
Though you can leave the profit in the company and ultimately wind the company up in the future and just pay I think 10% entrepreneurs tax.
The change in NI doesn't impact contractors (ltd) as far as I'm aware, but the reduction in dividend tax allowance from £5k to £2k will, along with anyone else with large share incomes so the likes of pensioners presumably.
Though you can leave the profit in the company and ultimately wind the company up in the future and just pay I think 10% entrepreneurs tax.
The change in NI doesn't impact contractors (ltd) as far as I'm aware, but the reduction in dividend tax allowance from £5k to £2k will, along with anyone else with large share incomes so the likes of pensioners presumably.
As a contractor, I will be substantially worse off but I don't really care that much as its levelling the tax situation, at least we still get paid a premium. What is more important is that as the tax advantaged has mostly been removed, HMRC can STFU about IR35 which is a load of nonsense designed to fix something which could have been easily fixed like they pretty much have now.
Soldato
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Yes, that was my understanding too.
So this new rate of NI is to hit sole traders for the most part, and the dividend tax to hit contractors for the most part.
Which would suggest, if their 60p a week BS is correct, that they think folks earn in the region of £11000 on average as self employed?
I don't believe that for a second.
So this new rate of NI is to hit sole traders for the most part, and the dividend tax to hit contractors for the most part.
Which would suggest, if their 60p a week BS is correct, that they think folks earn in the region of £11000 on average as self employed?
I don't believe that for a second.
If you are a Limited company you aren't going to be worse off. You do forget that the corporation tax goes down from April 1st at 19% (by 2020 that will be 17%).
That 1% drop on corporation tax, offsets by a big margin any NI changes (if you are paying yourself as salaried person) and also the £3000 from the dividend allowance which is taxed at 7.5%
The other bands don't change.
Personally with all these changes I will be better off.
Aye, but you're better off being self-employed if you're not earning enough to put you into the higher rate tax band I think?
Edit: Actually I think you're right about the 7.5%, the point at which you start paying the higher rate is fixed.
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No, but these crackdowns are about making sure the tail isn't wagging the dog.
You maybe but I'm not as I also lose virtually any benefit from being flat rate VAT registered. So in the last 2 years theres been 7.5/32.5% additional divi tax, loss of £3k divi allowance and loss of a huge chunk of FRS, that is quite a considerable sum of money. Admittedly we've gained a small amount on our personal allowance and 1% corp tax which is a small gain.
That said, as I mentioned before, I am not that bothered about it as it balances out the tax burden somewhat. I just want HMRC to drop IR35 which was really badly implemented load of nonsense. If they wanted people to pay more tax, then just get them to pay more tax like they have now.
yeah thats pretty annoying
The opposition don't need to. The government's predictions are really bad. Recessions are usually followed by good growth, instead we've got ten years of sub-trend growth and the worst wage growth in 210 years.
With you on this.