We’d like to remind Forumites to please avoid political debate on the Forum.

This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

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

12346»

Comments

  • 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.

    Couple of points:-

    1. EVERYONE gets a tax free allowance where they don't pay tax on a certain amount not just company directors.

    2. Corporation tax is paid on the dividends of 20%. This is then passed as a tax credit to the shareholder. In effect, though, 20% IS paid on the profit/dividend.

    Trouble is with your idea this would have to affect ALL ltd companies not just ones who people 'think' are abusing the system. Not sure in practice it would ever work.

    Government have tried to so a similar sort of thing for the past 10-15 years with IR35 legislation. Basically, this has tried to say that people working as if they were employees have to pay themselves their income 'mostly' as salary.

    In practice, it hasn't done well. Government has lost quite a few cases in court. For most contractors, its just a case of making sure you do things correctly so as to be outside IR35.

    But just remember that next time you're having a day off on leave or you feel ill and decide not to show up, you're getting paid generally. Some of us are not.
  • 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.

    Why?

    I earn £100 as a contractor. It goes into company account. Company pays £20 CT I get £80.

    If I'm a permie, I earn £100. taxman takes £20 I get £80.

    Whats the difference?
  • 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.

    Well said....:D
  • 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

    Dori - I can see a spot of jealousy here. If its so unfair that we're doing this why don't you do the same?
  • 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. ;)

    Think Dori just doesn't get this tax idea at all.
  • dori2o
    dori2o Posts: 8,150 Forumite
    Part of the Furniture 1,000 Posts
    edited 3 April at 1:58PM
    [quote=[Deleted User];62609983]Dori - I can see a spot of jealousy here. If its so unfair that we're doing this why don't you do the same?[/QUOTE]
    Because unlike some, I'm not a tax avoider. I accept my moral obligation to pay what is necessary. I don't take every step necessary to reduce my own burden, which in turn increases the burden on others, i.e the lowest paid.

    Unlike some, I have morals when it comes to paying taxes.
    [SIZE=-1]To equate judgement and wisdom with occupation is at best . . . insulting.
    [/SIZE]
  • notanewuser
    notanewuser Posts: 8,499 Forumite
    dori2o wrote: »
    Because unlike some, I'm not a tax avoider. I accept my moral obligation to pay what is necessary. I don't take every step necessary to reduce my own burden, which in turn increases the burden on others, i.e the lowest paid.

    Unlike some, I have morals when it comes to paying taxes.

    But you take out far far more than you put in!!!! So our corporation tax is actually funding you!
    Trying to be a man is a waste of a woman
  • dori2o wrote: »
    Because unlike some, I'm not a tax avoider. I accept my moral obligation to pay what is necessary. I don't take every step necessary to reduce my own burden, which in turn increases the burden on others, i.e the lowest paid.

    Unlike some, I have morals when it comes to paying taxes.

    Perhaps you deserve a knighhood?

    Either that or you're lying?
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 352.1K Banking & Borrowing
  • 253.5K Reduce Debt & Boost Income
  • 454.2K Spending & Discounts
  • 245.1K Work, Benefits & Business
  • 600.7K Mortgages, Homes & Bills
  • 177.4K Life & Family
  • 258.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.2K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.