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

[Clive Walker]

Can someone explain this to me

Does this only impact people who have suffered loss of earnings/profit?

 

[drew]

Because profit is the same as gross income in the employed world.

Another example - a builder carries out extensions, his turnover is £100,000, costs including running a van and office rent £70,000, profit £30,000. The £30,000 is the equivalent of someone grossing £30,000 in a job.

It’s no benefit to him personally that he banks £100k, £70k is accounted for, he has to live on £30k pre-tax, the same as an employed person grossing £30k.

No one is suggesting that the nation should pay small businesses an amount equal to their turnover, the country would be bankrupt within a week. The government’s measures match the best in the world and have been widely welcomed by Labour, the SNP, unions and the FSB.

Try comparing a self employed person whose income/turnover is £30k with someone that has a £30k salary.

 

[Bold Seagull]

Good to see the signalling on levelling up the tax burden in future, in a similar vein of going for the Facebook,, Amazon and other equivalents

But no sick leave on full pay, company pension contributions, paid holidays etc. for the self employed that many (not all) employed people get, and the job security and rights full time employment gives them. It's all very well saying levelling up, but self employment can be far more of a risk, and protections such as income protection, critical illness etc. are not tax deductible either. It's hardly anywhere near mentioning in the same sentence let along the same book the tax avoidance of big corporations compared to self employed to employed tax burdens.

 

[Weststander]

I actually traded as a limited company once...ironically it was a socialist government that made it attractive to do so .....Gordon Brown made it that the first 10k of profits was tax free...so as you do took salary covering personal allowance about 5k and balance in divs as net profit was sub 10k....only lasted a year i think ....Gordon couldn’t understand why so many rushed to become limited....i just set many own up over the net for £50 ...after a few years it became less and less attractive and not having an accountant i was filing a personal return a company return and stuff to companies house....sod that i thought ...started using an accountant and kept it simple reverted back to being self employed

That’s exactly right, small limited company hating class warriors on NSC, wouldn’t believe that it was Labour who pushed the huge increase in numbers. It was actually a very deliberate policy, a very senior tax expert told us that a limited company gave HMRC more assurance as to compliance by the taxpayer and the accounts format is far easier to benchmark for tax evasion.

Many people like you gave us the ghost, often sick of the admin, 2 Companies House deadlines per annum, payroll for the director, dividends and dealing with the dreaded overdrawn directors loan account, an array of other taxes linked to that, plus benefits and expenses returns. Some even spotted that the accountant who pushed for the limited company, charged a lot more!

 

[Weststander]

But no sick leave on full pay, company pension contributions, paid holidays etc. for the self employed that many (not all) employed people get, and the job security and rights full time employment gives them. It's all very well saying levelling up, but self employment can be far more of a risk, and protections such as income protection, critical illness etc. are not tax deductible either. It's hardly anywhere near mentioning in the same sentence let along the same book the tax avoidance of big corporations compared to self employed to employed tax burdens.

Plus taxes have steadily risen for owner directors since George Osborne become Chancellor in 2010, not least the new 7.5% tax band on (post corp tax) dividends in the basic rate band, and the tax free dividend band very swiftly reduced to £2,000.

 

[drew]

But no sick leave on full pay, company pension contributions, paid holidays etc. for the self employed that many (not all) employed people get, and the job security and rights full time employment gives them. It's all very well saying levelling up, but self employment can be far more of a risk, and protections such as income protection, critical illness etc. are not tax deductible either. It's hardly anywhere near mentioning in the same sentence let along the same book the tax avoidance of big corporations compared to self employed to employed tax burdens.

To be fair, if you are self employed then if you are a success then you get all the rewards. That's the risk.

 

[Weststander]

Try comparing a self employed person whose income/turnover is £30k with someone that has a £30k salary.

Another illustration then:

Someone earns gross £21,600 (12 x £1,800) in the employed world.

Leaving to take up self employment as a decorator, driving instructor or personal trainer, where they make a taxable profits of £12,000 a year (12 times £1,000).

Their choice of career change means that they now earn far less. That’s not the government’s fault, it’s just life.

Tax is a secondary and unrelated matter.

 

[Bold Seagull]

To be fair, if you are self employed then if you are a success then you get all the rewards. That's the risk.

I've read this a couple of times, not really sure what you mean? Success purely in financial terms, or the satisfaction of being you're own boss?

 

[LamieRobertson]

That’s exactly right, small limited company hating class warriors on NSC, wouldn’t believe that it was Labour who pushed the huge increase in numbers. It was actually a very deliberate policy, a very senior tax expert told us that a limited company gave HMRC more assurance as to compliance by the taxpayer and the accounts format is far easier to benchmark for tax evasion.

Many people like you gave us the ghost, often sick of the admin, 2 Companies House deadlines per annum, payroll for the director, dividends and dealing with the dreaded overdrawn directors loan account, an array of other taxes linked to that, plus benefits and expenses returns. Some even spotted that the accountant who pushed for the limited company, charged a lot more!

I remember going for my complimentary coffee and half hour chat with a firm in Hove..mentioned some figure for setting the company up and thought no way do it myself...i felt comfortable enough as in my previous incarnation i was a credit underwriter and used to reading/analysing balance sheets....but time/hassle etc changed my mind...bit like when machinery breaks i could probably mend most ..but I’m better off in money and satisfaction passing that job on to the pro’s

 

[Bold Seagull]

That’s exactly right, small limited company hating class warriors on NSC, wouldn’t believe that it was Labour who pushed the huge increase in numbers. It was actually a very deliberate policy, a very senior tax expert told us that a limited company gave HMRC more assurance as to compliance by the taxpayer and the accounts format is far easier to benchmark for tax evasion.

Amazing isn't it. Someone commits to a charged company bank account, statements fully checked with the company accounts for every penny. Submitted accounts that are open for public scrutiny, and an often painstaking amount of detail even for modest turnovers. So all the tax completely transparent, open for inspection, and the limited company traders are the bad guys?

 

[Gazwag]

Try comparing a self employed person whose income/turnover is £30k with someone that has a £30k salary.

But you cannot compare the two like that

Look at it this way, you have turnover of £50k, your costs are £20k your profit to service your mortgage, your season ticket, your living costs is £30k you will be entitled to 80% of that from the government

Me as an employee has a salary of £30k to do the same thing of that I would get 80% from the government

Your profit of course then suffers tax and NI which you pay in July and Jan each year

I suffer tax and NI at source

We end up exactly the same.

Your profit after tax and NI is say 25,000

My salary after tax and NI is say 25,000

We both have £25,000 for our personal expenditure

The only difference (for now!!) is I pay NI at 12% you pay 9%

 

[LamieRobertson]

Amazing isn't it. Someone commits to a charged company bank account, statements fully checked with the company accounts for every penny. Submitted accounts that are open for public scrutiny, and an often painstaking amount of detail even for modest turnovers. So all the tax completely transparent, open for inspection, and the limited company traders are the bad guys?

I didnt see or hear the announcement but reading through the bbc website report as this:

The sting in the tail? The chancellor said he can no longer justify, after things get back to normal, that self-employed people pay less tax than the employed. But that is for another day.

Is he referring to those who trade through Limited Companies....or the self employed over all

 

[Gazwag]

I didnt see or hear the announcement but reading through the bbc website report as this:

The sting in the tail? The chancellor said he can no longer justify, after things get back to normal, that self-employed people pay less tax than the employed. But that is for another day.

Is he referring to those who trade through Limited Companies....or the self employed over all

Edited:

He is referring to the Self employed.

Directors of companies pay NI at the same rate as any other employee

 

[LamieRobertson]

Self employed, directors of companies pay NI at the same rate as any other employee

So what’s he angling at

 

[Weststander]

I remember going for my complimentary coffee and half hour chat with a firm in Hove..mentioned some figure for setting the company up and thought no way do it myself...i felt comfortable enough as in my previous incarnation i was a credit underwriter and used to reading/analysing balance sheets....but time/hassle etc changed my mind...bit like when machinery breaks i could probably mend most ..but I’m better off in money and satisfaction passing that job on to the pro’s

I thought the other day that you’re too switched on to use an accountant, genuinely!

 

[Bold Seagull]

I didnt see or hear the announcement but reading through the bbc website report as this:

The sting in the tail? The chancellor said he can no longer justify, after things get back to normal, that self-employed people pay less tax than the employed. But that is for another day.

Is he referring to those who trade through Limited Companies....or the self employed over all

So the welfare state paid to bail the banks over 10 years of cuts, the self-employed to pay for the coronavirus over the next 10? Heaven forbid they go after any of their donors...

 

[Gazwag]

So what’s he angling at

NI for the self employed is 9% NI for employees is 12% at the moment - he is suggesting the 9% will become 12%

sorry my post was probably confusion looking at it, I'll edit it

 

[Weststander]

I didnt see or hear the announcement but reading through the bbc website report as this:

The sting in the tail? The chancellor said he can no longer justify, after things get back to normal, that self-employed people pay less tax than the employed. But that is for another day.

Is he referring to those who trade through Limited Companies....or the self employed over all

I think both, that’s 7.5m tax payers.

Paving the way for tax rises, to start servicing this huge new national debt. Even the socially minded/left wing Resolution Foundation said last week, in no way complaining, that taxes will need to rise for us all in a year or two’s time. Rather than austerity.

 

[Weststander]

So the welfare state paid to bail the banks over 10 years of cuts, the self-employed to pay for the coronavirus over the next 10? Heaven forbid they go after any of their donors...

Tax rises for everyone on non-low pay is my prediction.

 

[Weststander]

Edited:

He is referring to the Self employed.

Directors of companies pay NI at the same rate as any other employee

He didn’t specifically say “just National Insurance” did he?

I think you’re right. Until this month, the self employed have never had the benefit of all social security measures, I assume that they will from now on, at a NIC cost.