That's fair, but [MENTION=5208]drew[/MENTION]'s point still stands. Not every small business is a one man band who can decide to pay him/herself largely in dividends rather than as a salary in order to save 10-15% of their tax bill. And those small businesses got nothing.
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[Politics] Tory meltdown finally arrived [was: incoming]...
- Thread starter TomandJerry
- Start date
That's fair, but [MENTION=5208]drew[/MENTION]'s point still stands. Not every small business is a one man band who can decide to pay him/herself largely in dividends rather than as a salary in order to save 10-15% of their tax bill. And those small businesses got nothing.
It is entirely legal to do and, you're right, it is to avoid paying a tax, just as ISAs are a legal way of avoiding paying a tax. I'm guessing due to your comments, you don't have an ISA?
I’m not disputing his point, just commenting on the part I highlighted.
It’s perfectly legal to avoid NI by paying dividends rather than salary, but I have zero sympathy for anyone that missed out on elements of government support because they have avoided tax by doing so (and the tax avoided before & since probably dwarfs the support they missed out on anyway)
I don’t have an ISA because saving 40% of 0.2% interest is a waste of time.
It’s a false equivalence anyway. Everyone has the option of using an ISA as long as they have £1 or more to save.
Very few in comparison have the chance to opt out of paying more NI by paying themselves £8k a year in salary and the rest in dividends..
There's nothing to stop people starting a business. Most don't because of the lack of security compared to a salaried job.
Not sure of your reference to 0.2% interest? Not sure that has any relevance to a stocks and shares ISA.
In the case I know of, the company pays corporation tax and for it's employees, paid their employers national insurance contributions. They could get furlough for the staff but not for the directors/owners of the business.
beorhthelm
A. Virgo, Football Genius
- Jul 21, 2003
- 36,006
they could if on payroll. there was a bizarre exception for self employed/reporting income over 50k, which a lot of company owners found themselves in because they'd chosen dividends over payroll.
That sounds perfectly reasonable to me.
They got a chunk of support to enable them to furlough their staff (and therefore not make redundancies, helping the staff, the economy and also the directors/owners whose company then comes out of the lockdowns in better shape than it would have done otherwise).
The only bit they missed out on was furlough for themselves, which was due to them telling HMRC that the pay for their employment was low (under the NI threshold), and that the rest of the money received from the company was purely as a result of owning shares (definitely not a reward for providing work, nosiree, otherwise you'll add NI to my tax bill and ENIC to the company's). I don't think it's unreasonable to expect HMRC to continue to regard the earnings in the same way the individuals have been telling them to for years - it's not salary, it's dividends.
They saved (potentially quite a lot of) money doing this over the years and I'm supposed to feel sorry for them when that decision bites them on the arse further down the line?
For clarity, I am not criticizing them for using a very common & legal loophole. I am just saying that I don't believe they deserve any sympathy for not being able to furlough themselves because their own classification of income (to avoid tax) meant they couldn't claim it.
If you truly believe that everyone in the country has the wherewithal to start and run a business (whether due to the gifts they were born with, the opportunity afforded to them by the environment they grew up in, the standard of education available to them, or a combination of all), then I'll have some of what you've been drinking. If everyone runs their own business, we might run into issues of scale when one of those businesses needs to hire their first member of staff...
A cash ISA, as you are perfectly sure of already.
Fair point re a stocks & shares ISA, though given the state of global equities markets, I'm glad I don't have one currently. The other thing with ISAs is that there's a limit to the amount you can invest over a year & therefore shelter from tax. As far as I'm aware, there's no upper limit on what one can save through avoiding NI in the way we're debating here.
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Minus 18% since I put a bit into a stocks and shares ISA at the beginning of the year....
vegster
Sanity Clause
- May 5, 2008
- 28,267
I believe also that it is the same David Davis that said a post Brexit trade deal with the EU would be " The Easiest Deal in History "
Blue Valkyrie
Not seen such Bravery!
Johnson's deal was riddled with Salmonella but they haven't done a product recall and replace yet.
Baldseagull
Well-known member
A few Directors that took their annual pay in the right month, were paid out at the maximum, because the scheme paid 80% your salary based on one particular months pay. Those lucky few, and those that received nothing were an unintended consequence of trying to avoid fraud by companies adding people to a payroll so that they could be paid furlough.
You make it sound like the government deliberately excluded those taking earnings in the form of dividends rather than salary. Personally, I would suggest the government ****ed up. You also don't comment on those self employed that started work in the year before the pandemic. Anyone starting a business from April 2019 would only need to submit accounts before 31st Jan 21 so with no details to base the SEISS grant on they got nothing.
As for running a business, yes, I believe everyone can do it. It could be a window cleaning business, a professional tradesman, running a small shop or whatever. Everybody could but not everybody will.
beorhthelm
A. Virgo, Football Genius
- Jul 21, 2003
- 36,006
probably was deliberate. if you include all with earnings from dividends, be difficult to impossible to seperate owner-shareholding from any general share dividends. took the reasonable rule no NI, no cover. without some record of trade and earnings reported, they'd be a lot of new self employed people all of a sudden. that was harsher and could have brought in something later to show evidence.
- Aug 24, 2020
- 7,057
Another law Boris Johnson is happy to break, then?
- Aug 24, 2020
- 7,057
Anyone who thought the fallout from Brexit was over, should soon be disabused from that position.
Boris is seeking to change the N.I. protocol in terms of a green lane for goods between GB and NI (only), and a red lane for goods between GB and Eire (i.e. EU).
The EU are saying no, after having thrashed out the existing protocol with our jolly Brexiteers for 18 months.
Be under no illusion, this is one almighty cockup. Watch Brexiteers trying to blame the EU.
- Aug 24, 2020
- 7,057
Just when Tories thought it was safe to open their front doors, 8 asylum seekers (down from an initial 37) are due to be flown out on a one way trip to Rwanda tomorrow.
How in God's name did it come to this?
How in God's name did it come to this?
Blue Valkyrie
Not seen such Bravery!
Crime Ministers gotta break laws.