The Budget

lisyloo

Some describe it as a loop hole but it depends on whether you place any value on people who risk everything and create wealth

I was careful to say it was a sweeping generalisation to say it was used as a loophole.
However there are a lot of contractors working for one employer basically doing similar jobs as PAYE employees.
Those people are not risking everything, they are just doing a day job and getting a higher rate of pay in return for a lack of employment rights.
I think it's right that they are being asked to pay their fair share (even though DH is one of them).
I am sure there are some low paid contractors too, so there will of course be exceptions.

kabayiri

lisyloo wrote: »

An increase in tax on dividends - this is how some self-employed people pay themselves to avoid income tax. In most cases may be fair as it's closing down a tax avoidance loophole although that's a sweeping generalisation.
...

The legislation introduced by Labour back in 2000, the now notorious IR35, was intended to address this anomaly. The focus at the time was the IT contractor, but it extends to many other Personal Service Companies.

The problem was that the IR35 initiative was frankly a load of rubbish, and bypassed by creative contracts.

This tax increase will have unfair edge cases, but it is arguably more workable in most cases.

chucknorris

purch wrote: »

Why any landlord would want to be a sole trader is a complete mystery to me.

I'm a sole trader, at the beginning I had to start off that way for finance reasons. I did consider later switching to a limited company, but to be honest I couldn't see what advantages it offered me. Mainly to do with me being a sole trader and having lived in most of my investment properties, I have had and continue to (if there are no changes) enjoy substantial capital gains tax concessions.

If there is something that I have missed, I'd be happy to reconsider though, although I think I may not be too far from at least a partial sell off in the near future anyway.

afly

lisyloo wrote: »

I was careful to say it was a sweeping generalisation to say it was used as a loophole.
However there are a lot of contractors working for one employer basically doing similar jobs as PAYE employees.
Those people are not risking everything, they are just doing a day job and getting a higher rate of pay in return for a lack of employment rights.

Yes I totally agree

antrobus

purch wrote: »

Why any landlord would want to be a sole trader is a complete mystery to me.

Annual CGT allowance.

Individuals have one, corporates do not. Plus of course, if you hold a property in a company there is the prospect of double taxation.

movilogo

As someone who sits on both sides of the fence (both PAYE and self employed) I am pleased the dividend loophole is being closed. To pay yourself a basic wage to dodge tax only to take a huge "dividend" many times that basic salary is wrong.

Exactly! Many contractors (especially in IT) behave like normal employees pay less tax (on similar salary) just because they take low wage and huge dividend. Closing of this loophole was long overdue.

[Deleted User]

MFW_ASAP wrote: »

Where did I say anything about 25%? You seem to be buidling a strawman argument here.

Tut, tut. Very lazy

Out of interest, could you supply details on where you got your 4-7% figures? Certainly in Falkirk, the amount of Council tax spent on pensions was 50%.

Please see correspondence below:

4 March 2010
Dear McGirr, Alastair,
Thanks again, so basically 50% of council tax goes towards
pensions, and the rest goes too services?
Yours sincerely,
b ovens

Link to this | Send follow up

McGirr, Alastair
Falkirk Council

5 March 2010
Mr Ovens,
Yes you could say that in 2008/09 an amount equivalent to about 50% of the Council tax in that year went towards pension contributions. All Council income, other than the sums paid to pension schemes, is used to provide local services.
Alastair McGirr
Pensions Section
Falkirk Council
Tel 01324-506304
Fax 01324-506334

Hiya MFW_ASAP - I know that you wouldn't want anyone to believe that you were over-egging a particular pudding to make a point - so no doubt you would accept that the amount of the overall council budget for Falkirk raised from the Council Tax is actually only a small proportion of the total?

I don't know about "tut tut - very lazy", but be fair - what you have said above may be accurate, but as the Chancellor showed yesterday, you can state facts and still mislead people!

Instead of looking in disbelief at the 50% of CT that goes on pensions, if you look at the fact that CTax is only about 15% of the Falkirk Council's income, you could instead have said that 50% of 15% of the Council's income goes on pensions. For 2015-16, total net expenditure for the Council was estimated at just over 335m and of that "only" about 53m comes from Council Tax.

Now I freely accept that there was and is a debate to be had about pensions, and indeed about the funding of local government, but I think it should be carried out in a slightly more informative context than you (perhaps accidentally:D) presented.

I'm sure you wouldn't want anyone to think that 50% of the Falkirk Councils total income goes out on pensions? You are also, presumably aware that staff in the superan scheme now pay more for their pensions than they used to and that it's now "career average" not "final salary"? Just thought I'd check......

Yes, I am in receipt of a Local Government Superannuation Pension. I accept that it is a good deal for me, but at the time I joined the scheme in the 1980's the benefts it offered were not particularly unusual and the subsequent raids by G Brown weakened the investment potential of the funds.

WR

cells

chucknorris wrote: »

I'm a sole trader, at the beginning I had to start off that way for finance reasons. I did consider later switching to a limited company, but to be honest I couldn't see what advantages it offered me. Mainly to do with me being a sole trader and having lived in most of my investment properties, I have had and continue to (if there are no changes) enjoy substantial capital gains tax concessions.

If there is something that I have missed, I'd be happy to reconsider though, although I think I may not be too far from at least a partial sell off in the near future anyway.

They have already reduced the capital gains free period from 3 yeara to 1.5.

going forward I suspect they might also get rid of lettings relief and maybe even reduce the capital gains free period to 0.5 years

both of those I think would have made more sense than the illogical move regarding not being able to use interest as a cost for higher rate payers

chucknorris

cells wrote: »

They have already reduced the capital gains free period from 3 yeara to 1.5.

going forward I suspect they might also get rid of lettings relief and maybe even reduce the capital gains free period to 0.5 years

both of those I think would have made more sense than the illogical move regarding not being able to use interest as a cost for higher rate payers

I know that they have already reduced it to 18 months, and I am aware that further changes may come, which is another reason (in addition to yesterday's changes) that is encouraging me to sell up in the near future. If you notice I even said in my post:

chucknorris wrote: »

(if there are no changes)

MFW_ASAP

Wild_Rover wrote: »

so no doubt you would accept that the amount of the overall council budget for Falkirk raised from the Council Tax is actually only a small proportion of the total?

What does this have to do with the discussion about council tax contributions and council wrkers pensions?

Wild_Rover wrote: »

Instead of looking in disbelief at the 50% of CT that goes on pensions, if you look at the fact that CTax is only about 15% of the Falkirk Council's income, you could instead have said that 50% of 15% of the Council's income goes on pensions. For 2015-16, total net expenditure for the Council was estimated at just over 335m and of that "only" about 53m comes from Council Tax.

As we have agreed above, the discussion is about council tax paid by individual people and how much of it is used to pay pensions. Your information above is irrelevent in this context. We are not dicussing total council income - just the bit we as individuals pay with our council tax contributions each year.

Wild_Rover wrote: »

I'm sure you wouldn't want anyone to think that 50% of the Falkirk Councils total income goes out on pensions? You are also, presumably aware that staff in the superan scheme now pay more for their pensions than they used to and that it's now "career average" not "final salary"? Just thought I'd check.......

I have merely stated that 50% of Falkirk council tax goes towards pensions. Despite typing so much, you seem unable to refute this other than introducing other payments that unrelated to council tax.

Wild_Rover wrote: »

Yes, I am in receipt of a Local Government Superannuation Pension. I accept that it is a good deal for me

Ah, and so we get to the crux of it - self interest.

Do you not find it interesting the scenario that some council tax payers will be paying the pension of people who retired before the taxpayers themselves left school, indeed before some of them were even born? Is it fair that our children (and perhaps even their children) pay your pension despite never receiving any sort of service from you?

How long can this continue where more and more council workers retire on pensions provided by current taxpayers? There will come a point when 100% of council tax is collected to pay for pensions. It's just totally unsustainable.