[Finance] Self employed to receive 80% of income from the Gov’t too

[NooBHA]

Kind of rubbish though for say your average one-man-band turnover so an average tradesman / professional turnover, because the difference between tax paid as a Sole Trader - Limited Company isn't actually significant between the two, what is significant is the legal entity of trading, such as the exposure of personal assets, and as others have said, the requirements of customers of the service.

The difficulty of a sole trader as limited company is setting the salary to an extent of having money in the bank to pay it each month. For many it is about cash flow, and it is much easier to operate on a low salary keeping cash in the company as long as possible for potential fluctuations. The government prefer the limited company model with the company bank account and stricter accountancy rules, because of the loop holes sole trading gives you.

Out of all the people you can take a pop at with regard to tax affairs, your average 1 man band as a limited company operating perfectly and reasonably within the rules as set should not really be one of them. All this 'crying now' because they may have saved a couple of £100 here and there in tax just comes across as a bit misguided.

A couple of hundred here and there - Yeah Right - It is thousands every year for each business

 

[NooBHA]

I couldn't have put it better. Clearly, because I've tried.

Noo said he had clients/friends in this kind of situation. Not having a pop but I'm glad I'm not one of them. With friends like those......

Plus if you are doing work for these people and then chucking them under the bus (when you've profited from their situation previously) that's more than ideologically boss eyed. It's just plain nasty.

I just want everyone to be as ok as possible through this. It's going to cost EVERY government a bloody fortune but who cares provided people can still eat/live/pay their rent etc.

It'll come back in taxes/fines for those who blagged it and so on eventually anyway. For now we just need to look after people.

You are starting to sound like a cousin of mine who once said to me that him and his wife shouldn't have to pay any tax because they have kids to bring up

To which I responded - ''Who or what is going to pay for their Education at school then ? ME via my taxes ? - F#ck off - I didn't have any F#cking fun making them.''

 

[Bold Seagull]

A couple of hundred here and there - Yeah Right - It is thousands every year for each business

On what turnover and in turn actual profits is that based? Does the average tradesman / one man band saves thousands in tax between the 2 formats each year? We're talking 1-man-band, either as a sole trader or as a limited company. It's not significant, especially when you take off the increased costs involved as a limited company. The government are happier because they prefer the detailed accounting and link banked accounts.

 

[LlcoolJ]

Noo. You are now cherry picking individual quotes and ignoring entire posts. It's the sign of someone who has lost an argument and is floundering.

I think you are a good person from what I've seen on here and you are clearly intelligent and knowledgeable.

But this is getting unseemly. "Go big or go home" is the phrase I think.

So either answer all the points raised or admit that you might be wrong (nothing wrong with admitting you're wrong, it's only my wife who seems to be incapable). Or just leave it maybe.....

 

[LlcoolJ]

You are starting to sound like a cousin of mine who once said to me that him and his wife shouldn't have to pay any tax because they have kids to bring up

To which I responded - ''Who or what is going to pay for their Education at school then ? ME via my taxes ? - F#ck off - I didn't have any F#cking fun making them.''

Really?

That's absolutely not what I've said at all and I can't actually work out how you've taken that leap.

Cherry picking again. But this time nonsensically.

Chill Winston.

 

[LamieRobertson]

This thread is really useful with professionals willing to share their knowledge which being self employed I am grateful for ..any chance we can take the ‘politics’ out of it!

 

[NooBHA]

On what turnover and in turn actual profits is that based? You're living in cloud cuckoo-land if you think the average tradesman / one man band saves thousands in tax between the 2 formats each year. What do you imagine they are all on to be saving thousands? You're thinking of a completely different earning spectrum. We're talking 1-man-band, either as a sole trader or as a limited company. You don't seem to have a grasp of the reality.

The £2K Tax Free dividend alone saves a 40% Taxpayer £800

Companies pay 19% CT plus 7.5% on remaining dividends - So a total of 26.5%

As opposed to 20% and 40% - That's before you even get to the Avoidance of the Class 4 NIC at 9% that self employment taxpayers pay - They have the power to restrict liabilities by retaining monies in the company which self employed taxpayers don't have.

It is most definitely not £100 here and there.

 

[Bold Seagull]

You are starting to sound like a cousin of mine who once said to me that him and his wife shouldn't have to pay any tax because they have kids to bring up

To which I responded - ''Who or what is going to pay for their Education at school then ? ME via my taxes ? - F#ck off - I didn't have any F#cking fun making them.''

Are you an accountant? I do have some sympathy, I'm starting to feel a bit like that in my profession as an architect. "what do you mean you want a bespoke designed special dog wash facility...what the **** is that?...wash it in the bloody bath!"

 

[NooBHA]

Are you an accountant? I do have some sympathy, I'm starting to feel a bit like that in my profession as an architect. "what do you mean you want a bespoke designed special dog wash facility...what the **** is that?...wash it in the bloody bath!"

I'm Tax Accountant and Tax Lawyer - I specialise in Contact Laws in UK and Overseas and how contact income would be taxed both here and in foreign territories globally

 

[Shropshire Seagull]

A couple of hundred here and there - Yeah Right - It is thousands every year for each business

Not sure you fully understand the wider tax basis .... let's just run some simple example sums ...

If a one-man-band operating as a ltd business [so invoicing all chargeable work] invoices, say £75k p/a and PAYE's him/herself NI efficiently say £8,640, will still need some money to live on.
Depending on lifestyle, this will likely be between, say, £20k - £40k - the first £2k is tax free, the rest is @ 9% dividend tax
But lets not forget that dividend can only come from business profit - which will also be taxed @ 19%.

So whilst being NI efficient on PAYE salary", the other income this type of worker "earns" will have been taxed at 28% - via corporation tax and dividend tax - notice this is broadly between 20% basic and 40% higher rate.
It would be wrong IMHO to call these people tax dodgers - they are still paying tax, just in different ways.

In the example above, with £75k revenue and say £25k in [legitimate!] business costs [inc PAYE salary] leaves £50k - liable for full corporation tax - but a good accountant would probably advise, if you only need £25k dividend to live off, reduce your corp-tax liability by depositing £25k into your pension fund.

Would that be considered smart or dodgy?

 

[Driver8]

https://www.ftadviser.com/your-industry/2020/03/26/self-employed-targeted-in-covid-19-scam/

 

[LlcoolJ]

This thread is really useful with professionals willing to share their knowledge which being self employed I am grateful for ..any chance we can take the ‘politics’ out of it!

No chance, this is NSC. [emoji23]

 

[LlcoolJ]

Not sure you fully understand the wider tax basis .... let's just run some simple example sums ...

If a one-man-band operating as a ltd business [so invoicing all chargeable work] invoices, say £75k p/a and PAYE's him/herself NI efficiently say £8,640, will still need some money to live on.
Depending on lifestyle, this will likely be between, say, £20k - £40k - the first £2k is tax free, the rest is @ 9% dividend tax
But lets not forget that dividend can only come from business profit - which will also be taxed @ 19%.

So whilst being NI efficient on PAYE salary", the other income this type of worker "earns" will have been taxed at 28% - via corporation tax and dividend tax - notice this is broadly between 20% basic and 40% higher rate.
It would be wrong IMHO to call these people tax dodgers - they are still paying tax, just in different ways.

In the example above, with £75k revenue and say £25k in [legitimate!] business costs [inc PAYE salary] leaves £50k - liable for full corporation tax - but a good accountant would probably advise, if you only need £25k dividend to live off, reduce your corp-tax liability by depositing £25k into your pension fund.

Would that be considered smart or dodgy?

What concerns me is that he understands all this fully but is still in favour of shafting anyone in that type of situation.

Including people who have paid him for his professional advice on the subject and those he classes as friends.

That's just bizarre.

 

[Bold Seagull]

I'm Tax Accountant and Tax Lawyer - I specialise in Contact Laws in UK and Overseas and how contact income would be taxed both here and in foreign territories globally

Fair enough. I just don't get why you think that honest tradesman, professionals and one man band business owners up and down the country are dodging tax when submitting perfectly legal and publicly available detailed accounts to rules long established by HMRC. With the various taxation loopholes corporations and the wealthy exploit, for you to vilify this group just seems really out of place.

 

[LlcoolJ]

https://www.ftadviser.com/your-industry/2020/03/26/self-employed-targeted-in-covid-19-scam/

Said earlier that the blaggers will be out in force. This is just the start.

Anyone who's self employed (or anyone actually), if you get an email/text "from HMRC" it will probably be a scam.

Contact your accountant of you're not sure, or if you don't have one then PM me if you need any advice on this. I don't charge for advice and I see this shït all the time.

 

[LlcoolJ]

Fair enough. I just don't get why you think that honest tradesman, professionals and one man band business owners up and down the country are dodging tax when submitting perfectly legal and publicly available detailed accounts to rules long established by HMRC. With the various taxation loopholes corporations and the wealthy exploit, for you to vilify this group just seems really out of place.

Indeed.

 

[NooBHA]

Not sure you fully understand the wider tax basis .... let's just run some simple example sums ...

If a one-man-band operating as a ltd business [so invoicing all chargeable work] invoices, say £75k p/a and PAYE's him/herself NI efficiently say £8,640, will still need some money to live on.
Depending on lifestyle, this will likely be between, say, £20k - £40k - the first £2k is tax free, the rest is @ 9% dividend tax
But lets not forget that dividend can only come from business profit - which will also be taxed @ 19%.

So whilst being NI efficient on PAYE salary", the other income this type of worker "earns" will have been taxed at 28% - via corporation tax and dividend tax - notice this is broadly between 20% basic and 40% higher rate.
It would be wrong IMHO to call these people tax dodgers - they are still paying tax, just in different ways.

In the example above, with £75k revenue and say £25k in [legitimate!] business costs [inc PAYE salary] leaves £50k - liable for full corporation tax - but a good accountant would probably advise, if you only need £25k dividend to live off, reduce your corp-tax liability by depositing £25k into your pension fund.

Would that be considered smart or dodgy?

Really ??

 

[NooBHA]

Fair enough. I just don't get why you think that honest tradesman, professionals and one man band business owners up and down the country are dodging tax when submitting perfectly legal and publicly available detailed accounts to rules long established by HMRC. With the various taxation loopholes corporations and the wealthy exploit, for you to vilify this group just seems really out of place.

I don't condone the Loopholes which large Corporations Exploit. Not in the slightest.

All I am saying in this instance is. When a certain group have made favourable financial use of the laws of the land for their financial gain. You can't start crying when all of a sudden those same laws no longer work to your advantage.

 

[LlcoolJ]

I don't condone the Loopholes which large Corporations Exploit. Not in the slightest.

All I am saying in this instance is. When a certain group have made favourable financial use of the laws of the land for their financial gain. You can't start crying when all of a sudden those same laws no longer work to your advantage.

The hole you're digging is getting bigger and bigger.

You said that you have clients who are in this situation. So presumably they paid you for advising them that it was the best thing to do. Unless you were giving them incorrect professional advice.

So you have profited from, and assisted with, people being in the exact situation that you are now saying is wrong.

What the actual f**k?

 

[Bold Seagull]

I don't condone the Loopholes which large Corporations Exploit. Not in the slightest.

All I am saying in this instance is. When a certain group have made favourable financial use of the laws of the land for their financial gain. You can't start crying when all of a sudden those same laws no longer work to your advantage.

'Financial use of the laws of the land for their financial gain'.

And you're an accountant and lawyer!

Besides, no one was crying, but the things you were saying, intentionally provocative, largely unfounded, and deserving of you being picked up on.