Can't claim JSA because I haven't paid Class 1 NI!!!

dori2o

This is exactly the reason why the law needs changing on this matter.

Directors of Ltd companies pay themselves a salary just over the LEL for NI so they pay no tax at all on their 'earings', then don't personally pay any tax at all on the dividend payments they receive so long as their gross income stays below £41450.

The law should be changed so that dividend payments they take from the company cannot equal more than 20% of their total income (salary and divs) from that company. This would ensure they get some benefit from being a director of a ltd company/entrepreneur, but also they pay their fair share of personal income tax. So for example, if they wish to take £20k of dividend payments from the company, they must have a salary of £80k from that company.

notanewuser

dori2o wrote: »

This is exactly the reason why the law needs changing on this matter.

Directors of Ltd companies pay themselves a salary just over the LEL for NI so they pay no tax at all on their 'earings', then don't personally pay any tax at all on the dividend payments they receive so long as their gross income stays below £41450.

The law should be changed so that dividend payments they take from the company cannot equal more than 20% of their total income (salary and divs) from that company. This would ensure they get some benefit from being a director of a ltd company/entrepreneur, but also they pay their fair share of personal income tax. So for example, if they wish to take £20k of dividend payments from the company, they must have a salary of £80k from that company.

There's already been 20% tax (corporation) paid on the dividends. All you save is the NI.

princessdon

notanewuser wrote: »

There's already been 20% tax (corporation) paid on the dividends. All you save is the NI.

Or 40% (whistles) its tax avoidance, legal but true.

notanewuser

princessdon wrote: »

Or 40% (whistles) its tax avoidance, legal but true.

Sorry, I don't understand your point. 40%?

dori2o

notanewuser wrote: »

There's already been 20% tax (corporation) paid on the dividends. All you save is the NI.

CT is not INCOME TAX.

Whether or not 20% tax has been paid in CT makes no difference to an idividiuals own INCOME TAX, in which it is entirely possible for an individual to receive an income of £41k and pay absolutely no personal tax.

It's completely unfair and is one loophole that needs reviewing or closing completely.

notanewuser

dori2o wrote: »

CT is not INCOME TAX.

Whether or not 20% tax has been paid in CT makes no difference to an idividiuals own INCOME TAX, in which it is entirely possible for an individual to receive an income of £41k and pay absolutely no personal tax.

It's completely unfair and is one loophole that needs reviewing or closing completely.

I disagree (but I would, wouldn't I?). All of the money that DH and I bring into our company is effectively ours. There are a couple of tax perks, but the risks are all ours. We don't have an employer to take responsibility for us, because we are the employer. We use our personal allowances against our salaries. If we were taking our dividends as salary we wouldn't be paying corp tax, we'd be paying the same amount in income tax though. We save the NI costs. But given we take NO cash benefits from the government, pay for DD's childcare ourselves and have private health cover, we're by far net contributors to the country (and have been for over 40 years between us).

They won't close the loopholes for one reason. People like us would be on the first plane to the Middle East and bye bye tax income for the UK.

dori2o

notanewuser wrote: »

I disagree (but I would, wouldn't I?). All of the money that DH and I bring into our company is effectively ours. There are a couple of tax perks, but the risks are all ours. We don't have an employer to take responsibility for us, because we are the employer. We use our personal allowances against our salaries. If we were taking our dividends as salary we wouldn't be paying corp tax, we'd be paying the same amount in income tax though. We save the NI costs. But given we take NO cash benefits from the government, pay for DD's childcare ourselves and have private health cover, we're by far net contributors to the country (and have been for over 40 years between us).

They won't close the loopholes for one reason. People like us would be on the first plane to the Middle East and bye bye tax income for the UK.
Bye Bye then. Don't let the door hit you on the @rse on the way out

There are NO risks to you tax wise.

You are not responsible for the CT, the company is. Therefore YOU pay no income tax in the UK, if your salary from the Ltd Co is less than the personal allowance and your total taxable income (salary + divs) is less than the higher rate tax threshold

enabledebra

[quote=[Deleted User];62563903]Works for immigrants.... :-([/QUOTE]

Really? Link please.

notanewuser

dori2o wrote: »

There are NO risks to you tax wise.

You are not responsible for the CT, the company is. Therefore YOU pay no income tax in the UK, if your salary from the Ltd Co is less than the personal allowance and your total taxable income (salary + divs) is less than the higher rate tax threshold

There are risks to us if we can't find contracts, !!!!!!. In our case the company's income is effectively our income. If we didn't have to pay corporation tax then we'd be able to pay ourselves 20% more!

At least we're paying into the system. As a civil servant who is reliant on tax credits and health issues you're by far a taker from the pot.

I'm pretty sure the money "lost" by the government by NI savings in companies like ours is a pittance compared with the fiddles the multinationals are pulling.

Dunroamin

notanewuser wrote: »

There are risks to us if we can't find contracts, !!!!!!. In our case the company's income is effectively our income. If we didn't have to pay corporation tax then we'd be able to pay ourselves 20% more!

At least we're paying into the system. As a civil servant who is reliant on tax credits and health issues you're by far a taker from the pot.

I'm pretty sure the money "lost" by the government by NI savings in companies like ours is a pittance compared with the fiddles the multinationals are pulling.

Unfortunately, I do feel that both come from the same mindset.