Anyone have there own Company? What do you think of the new 7.5% dividend tax.

[wallyback]

Massive increase in tax for what tends to be traditional Tory voters

 

[Lord Bracknell]

Income being taxed? Disgraceful. Especially if you voted Tory.

 

[nwgull]

Massive increase in tax for what tends to be traditional Tory voters

Worked out that it would make negligible difference when combined with the reduction in corp tax.

This was admittedly a bit of a fag packet calc done using my rudimentary accountancy knowledge.

 

[warmleyseagull]

I do, and naturally not overwhelmed, but think it is fair and reasonable. Hopefully it will mean there is no longer an advantage of setting oneself up as a company rather then trading as self employed. This is a tax and NI avoidance method that was well overdue for sorting out.

 

[Prettyboyshaw]

Yep kick in the bollox that was considering company tax ni and personal tax I and my company already pay. Even more annoying as when we gave a quote to a young Polish lad this week he said he was not working or not planning to work as benefits gave him more money (well that what his girlfriend interpreted as he couldn't speak English!

 

[nwgull]

I do, and naturally not overwhelmed, but think it is fair and reasonable. Hopefully it will mean there is no longer an advantage of setting oneself up as a company rather then trading as self employed. This is a tax and NI avoidance method that was well overdue for sorting out.

I've forgotten the details of it now, but I don't think that it's going to make any difference to one-man Ltd companies having to make NI payments.

 

[Pork Knuckle Pete]

Yes I do. I think it's a good thing. That's two Tory policies I agreed with in the last budget. The other being B2L tax.

 

[Pork Knuckle Pete]

I've forgotten the details of it now, but I don't think that it's going to make any difference to one-man Ltd companies having to make NI payments.

It will if you'd paid yourself huge dividends.

 

[Pork Knuckle Pete]

I do, and naturally not overwhelmed, but think it is fair and reasonable. Hopefully it will mean there is no longer an advantage of setting oneself up as a company rather then trading as self employed. This is a tax and NI avoidance method that was well overdue for sorting out.

Agree.

 

[Bozza]

If you don't want to pay the new dividend tax, pay yourself a higher income instead of the dividend. Hope this helps.

 

[nwgull]

It will if you'd paid yourself huge dividends.

I'll have to check our calcs, but from memory, I seem to remember that any extra tax payable because of this was insignificant in relation to overall income - hence we've more or less forgotten about it for the accountants to worry about. And the corp tax is being reduced by 2% over the next 4 years which will offset it to a large extent.

NI is only payable on salary, so I can't see how it will be affected by this.

 

[driller]

Trying to stop tax dodging

Get over it.

 

[LamieRobertson]

Income being taxed? Disgraceful. Especially if you voted Tory.

It's slightly ironic given that many years ago Gordon Brown the then Chancellor made the first 10k of net profit free from corporation tax ..thus encouraging people to 'go' Ltd and pay themselves a salary up to there personal allowance and take the next 10k free of tax ...needless to say this policy was dropped shortly after.

 

[nwgull]

Trying to stop tax dodging

Get over it.

Who said anything about tax dodging?

 

[Monkey Man]

From The Telegraph:

While it’s true that many will pay more, such as basic-rate taxpayers who receive more than £5,000 in dividends, there are others, such as higher-rate taxpayers with £5,000 or less in dividend income, who will gain – currently they pay 25 per cent on the whole sum (or £1,250), while under the new regime there will be no tax to pay, thanks to the £5,000 allowance.

 

[warmleyseagull]

I've forgotten the details of it now, but I don't think that it's going to make any difference to one-man Ltd companies having to make NI payments.

You are right that it does not change NI treatment but the fact that OMLs mean employers NI is avoided has always been one of the main benefits of establishing a company. My understanding is that the dividend change will at least reduce significantly the benefit of OMLs if not eliminate it altogether.

 

[Pavilionaire]

If you don't want to pay the new dividend tax, pay yourself a higher income instead of the dividend. Hope this helps.

What, and incur both employees NI (12%) AND employer's NI (13.8%) on your salary? That's precisely why so many Ltd company owner-managers take a basic salary equivalent to their Personal Allowance and dividends on top.

David Cameron did it again for the 2nd election in a row:

1. 2010 - no jobs tax (employer's NI) increase pre-election, then he puts it up by 1% immediately after the election.
2. 2015 - election pledge of triple lock on tax - no rises to income tax, NI, VAT BUT no mention of the new dividend tax introduced just weeks after polling day.

Those taking dividends up to the Higher Rate of tax will be £1,500 per year worse off. Directors will have to wait another year before the CT rate falls by 1% - saving c. £400, and five years for the second 1% decrease saving another £400. However, it's also very likely the Chancellor will increase the dividend tax rate from 7.5% to 9% to bring it into line with Class 4 NI paid by sole traders, so costing another £300 annually.

 

[nwgull]

You are right that it does not change NI treatment but the fact that OMLs mean employers NI is avoided has always been one of the main benefits of establishing a company. My understanding is that the dividend change will at least reduce significantly the benefit of OMLs if not eliminate it altogether.

I see what you mean. Although, I think dividends would need to very high before it becomes more 'tax efficient' pay NI - employees' and employers' - than to pay the extra dividen tax. Something that's unlikely to affect most OMLs, because there's only so many hours and so much that one man can earn.

It's more likely to affect the owners of SMEs.

 

[Bozza]

What, and incur both employees NI (12%) AND employer's NI (13.8%) on your salary? That's precisely why so many Ltd company owner-managers take a basic salary equivalent to their Personal Allowance and dividends on top.

I think it is here where I'm supposed to say: Whoosh.

 

[Pork Knuckle Pete]

If you don't want to pay the new dividend tax, pay yourself a higher income instead of the dividend. Hope this helps.

This will increase the NI though.