The new dividend tax - does this mean contractors who paid themselvs big divvies

lisyloo

not perfectly legitimate when it has nothing to do with the company ie filling the family car up with petrol, going on holiday (or "business trip"), mobile phones etc etc. All hidden/grey areas.

What you are talking about there is tax evasion which is illegal.
It's an entirely different matter to legal (but morally questionable) tax avoidance.

theEnd

TheBlueHorse wrote: »

not perfectly legitimate when it has nothing to do with the company ie filling the family car up with petrol, going on holiday (or "business trip"), mobile phones etc etc. All hidden/grey areas.

I doubt many people claim VAT back on a family holiday, but business trips, mobiles, petrol etc perfectly legit in the same way the VAT would be claimed back by the company for an employees trip, company car or mobile.

TheBlueHorse

lisyloo wrote: »

What you are talking about there sounds like fraud to me which I agree is wrong, but it's not the same as unfair rules.

No, I have no issue with the VAT being reclaimable on genuine business transactions. It is the fact the unscrupulous few can get away with it on so much more.


You buy a desk fan for example. On a hot day, you use it in the house. How do they know if that is a genuine expense or not? It's too hard to tell. They need to think of a better way of dealing with it.

theEnd

lisyloo wrote: »

Are you certain about this?
Citywire say this
http://citywire.co.uk/new-model-adviser/news/summer-budget-gov-t-overhauls-dividend-tax-regime/a825348

or are you only talking about the higher rate part?

I am pretty sure there isn't loads of tax to pay and I'm talking from real experience and NOT doing anything fradulent but certainly avoiding tax.

Yes, I am certain.

At the lower tax rate you do not pay anything further on the dividend taken, but you've already paid 20% corp tax.

afly

I mentioned this on another thread and I know I'm at odds with many on here, but it is frustrating as a business owner to be in the lowest tax band we have in the UK and facing a potential 1.5k tax hike

I totally get that people abused this system to trouser more cash in what could otherwise be considered normal employment but this is like scrapping the benefit system because some abused it.

For genuine small business owners the dividend credit (payable only after corporation tax) was one of the few incentives to take and continue to take the massive risk of going it alone sacrificing paid holidays, sickness and pension contributions in the process. It's just not comparable to monthly guaranteed income with employment protections.

A dividend is supposed to be a reward for prior investment. Those who are getting dividends from large cash investments are untouched by the changes, it's the ones investing their blood sweat & tears into their businesses that are going to carry the burden.

We should be encouraging people to start businesses, employ staff and make a success of themselves. This change is just one more reason to give it all up and go and work for some mega corporation and live the easy life

theEnd

TheBlueHorse wrote: »

You buy a desk fan for example. On a hot day, you use it in the house. How do they know if that is a genuine expense or not? It's too hard to tell. They need to think of a better way of dealing with it.

But say you work from home once in a while and ask your employee to provide fan as it's too hot at home. No difference.

lisyloo

Yes, I am certain.

At the lower tax rate you do not pay anything further on the dividend taken, but you've already paid 20% corp tax.

Ok, but you don't pay NI at 12% right?
So contractor pays 20% and PAYE person pays 32% right?
So contractor is better off.

TheBlueHorse

theEnd wrote: »

I doubt many people claim VAT back on a family holiday, but business trips, mobiles, petrol etc perfectly legit in the same way the VAT would be claimed back by the company for an employees trip, company car or mobile.

the family holiday IS the business trip.


the mobile phone is essentially personal


the petrol is his wife driving kids around


and so on....

theEnd

lisyloo wrote: »

Ok, but you don't pay NI at 12% right?
So contractor pays 20% and PAYE person pays 32% right?
So contractor is better off.

Correct. And there's the ENI too.

lisyloo

No, I have no issue with the VAT being reclaimable on genuine business transactions.

When contractors can get trains paid this seems wrong when PAYE employees have to pay for their own commute.