Taxes!!

[Participant]

Although I agree the UK tax system is counter productive, this sounds a lot like "I used to work around the tax system in a way employees on PAYE can't and now I'm ****** they closed the loopholes".

So you're an advocate of tax parity between risk-taking entrepreneurs and risk avoiding PAYEers?

You don't think there should be any premium attached to incentivise people to start businesses?

Perhaps you think that the state should own all revenue-generating assets and that any individual wealth should be retained by the state for equitable distribution.

 

[VincentHanna]

I won't be, I'm retiring as soon as there's £1m in my pension.

When I started, the dividends from a limited company were incentivising entrepreneurs. Now they are not. So I'll retire earlier than planned and pay less tax than if I felt it was worth continuing to grow and work longer for my family.

Every tax ratchet gets me closer to the point where I'm no longer incentivised to create growth or wealth in the economy, which is the result of Reeves's anti-growth policies.

The conservatives whacked corporation tax from 19 to 25% though, that's taking a lot more from company owners...

 

[Hagar]

So you're an advocate of tax parity between risk-taking entrepreneurs and risk avoiding PAYEers?

You don't think there should be any premium attached to incentivise people to start businesses?

Perhaps you think that the state should own all revenue-generating assets and that any individual wealth should be retained by the state for equitable distribution.

While i generally agree with some of your points if the risk takers are genuinely creating wealth for others as well as themselves, employers etc. I dispute your terminology of PAYE as being risk averse, most people have little choice in that status. You are being crass and insulting to the majority of tax payers.

 

[VincentHanna]

While i generally agree with some of your points if the risk takers are genuinely creating wealth for others as well as themselves, employers etc. I dispute your terminology of PAYE as being risk averse, most people have little choice in that status. You are being crass and insulting to the majority of tax payers.

Yep, very snooty attitude

Also not all entrepreneurs are taking a "huge risk" to be honest, the majority of ltd companies (94%) have profits below £250,000 and 1/3 have profits of less than £50,000. Yes, there will be a lot of people struggling to make much money but then there will be people who have realised it's more tax efficient to have a ltd company.

 

[Semple]

So you're an advocate of tax parity between risk-taking entrepreneurs and risk avoiding PAYEers?

You don't think there should be any premium attached to incentivise people to start businesses?

Perhaps you think that the state should own all revenue-generating assets and that any individual wealth should be retained by the state for equitable distribution.

Some businesses, yes. The majority, no.

I'm curious, what supposed "risks" have you had to take during setup and growth of your business.

Also as others are pointing out, it's pretty delusional to think anyone in a PAYE job isn't also taking on any form of risk.

 

[200sols]

I won't be, I'm retiring as soon as there's £1m in my pension.

When I started, the dividends from a limited company were incentivising entrepreneurs. Now they are not. So I'll retire earlier than planned and pay less tax than if I felt it was worth continuing to grow and work longer for my family.

Every tax ratchet gets me closer to the point where I'm no longer incentivised to create growth or wealth in the economy, which is the result of Reeves's anti-growth policies.

You're blaming Reeves though, why? The system was largely built before her... by the tories. She added 2p to dividend taxes, hardly a deal breaker.

 

[VincentHanna]

You're blaming Reeves though, why? The system was largely built before her... by the tories. She added 2p to dividend taxes, hardly a deal breaker.

Indeed.

In 2016/17 you used to get £5000 tax free and you could go on basic PAYE to get your tax free amount and then only pay 7.5% on your dividends - So 0% tax on £11000 PAYE and 0% tax on £5000 dividend and then 7.5% tax on £27,000. You could earn £43,000 and only pay £2000 tax.

Anyone on PAYE during that time earning £43000 would pay 3x times that amount...

By April 2024 (Before Labour were in government) that tax free amount had dropped to £500 and the tax rate had increased to 8.25%

 

[EvilRob]

So you're an advocate of tax parity between risk-taking entrepreneurs and risk avoiding PAYEers?

You don't think there should be any premium attached to incentivise people to start businesses?

Perhaps you think that the state should own all revenue-generating assets and that any individual wealth should be retained by the state for equitable distribution.

Dividend treatment wasn't a reward for risk taking, it was a structural advantage that let many people doing pretty much the same work as employees pay less tax. The real incentives for actually building value are still there - scaling revenue and creating an asset you can sell.

If your business only makes sense because you're paid more efficiently than an employee, that's more a hint that the business you've built is optimised for tax structure rather than growth that's contributing to wealth creation.