Rishi after Pensions Tax Relief

Anonymous101

badmemory said:

Rather than messing with pensions why not just stop people from taking lower than tax & NI amounts out of their businesses & taking it in dividends instead.  It would also stop them from whinging that they couldn't live on their furloughed income.  The world is full of unintended consequences!

I upset a couple of friends of mine by talking through that issue with them. Unfortunately it seems most self employed people are happy to be treated as investors when it comes to benefitting from the lower taxes they attract on receipt but don't like to be treated as investors when it comes to the level of income support they attract. Unfortunately you can't have it both ways.

MDMD

Anonymous101 said:

badmemory said:

Rather than messing with pensions why not just stop people from taking lower than tax & NI amounts out of their businesses & taking it in dividends instead.  It would also stop them from whinging that they couldn't live on their furloughed income.  The world is full of unintended consequences!

I upset a couple of friends of mine by talking through that issue with them. Unfortunately it seems most self employed people are happy to be treated as investors when it comes to benefitting from the lower taxes they attract on receipt but don't like to be treated as investors when it comes to the level of income support they attract. Unfortunately you can't have it both ways.

One argument that is trotted out for why they do this is because they can’t pay themselves a Normal monthly salary due to variations in profits. But I don’t understand why they couldn’t just pay a bonus (via PAYE) to themselves when circumstances allow, even if that is just on the last day of their financial year.

garmeg

MDMD said:

Anonymous101 said:

badmemory said:

Rather than messing with pensions why not just stop people from taking lower than tax & NI amounts out of their businesses & taking it in dividends instead.  It would also stop them from whinging that they couldn't live on their furloughed income.  The world is full of unintended consequences!

I upset a couple of friends of mine by talking through that issue with them. Unfortunately it seems most self employed people are happy to be treated as investors when it comes to benefitting from the lower taxes they attract on receipt but don't like to be treated as investors when it comes to the level of income support they attract. Unfortunately you can't have it both ways.

One argument that is trotted out for why they do this is because they can’t pay themselves a Normal monthly salary due to variations in profits. But I don’t understand why they couldn’t just pay a bonus (via PAYE) to themselves when circumstances allow, even if that is just on the last day of their financial year.

Easy Answer: Corporation tax plus Dividend tax is a lot less than PAYE income tax plus Employer NI plus Employee NI.

Anonymous101

garmeg said:

MDMD said:

Anonymous101 said:

badmemory said:

Rather than messing with pensions why not just stop people from taking lower than tax & NI amounts out of their businesses & taking it in dividends instead.  It would also stop them from whinging that they couldn't live on their furloughed income.  The world is full of unintended consequences!

I upset a couple of friends of mine by talking through that issue with them. Unfortunately it seems most self employed people are happy to be treated as investors when it comes to benefitting from the lower taxes they attract on receipt but don't like to be treated as investors when it comes to the level of income support they attract. Unfortunately you can't have it both ways.

One argument that is trotted out for why they do this is because they can’t pay themselves a Normal monthly salary due to variations in profits. But I don’t understand why they couldn’t just pay a bonus (via PAYE) to themselves when circumstances allow, even if that is just on the last day of their financial year.

Easy Answer: Corporation tax plus Dividend tax is a lot less than PAYE income tax plus Employer NI plus Employee NI.

I've no truck with anyone that chooses to pay themselves like that. However they need to understand that they are treating themselves as investors by doing so and with that comes a level of risk. The news was full of people that failed to understand that concept and expected the government to support their dividends payments through the pandemic.

garmeg

Anonymous101 said:

garmeg said:

MDMD said:

Anonymous101 said:

badmemory said:

Rather than messing with pensions why not just stop people from taking lower than tax & NI amounts out of their businesses & taking it in dividends instead.  It would also stop them from whinging that they couldn't live on their furloughed income.  The world is full of unintended consequences!

I upset a couple of friends of mine by talking through that issue with them. Unfortunately it seems most self employed people are happy to be treated as investors when it comes to benefitting from the lower taxes they attract on receipt but don't like to be treated as investors when it comes to the level of income support they attract. Unfortunately you can't have it both ways.

One argument that is trotted out for why they do this is because they can’t pay themselves a Normal monthly salary due to variations in profits. But I don’t understand why they couldn’t just pay a bonus (via PAYE) to themselves when circumstances allow, even if that is just on the last day of their financial year.

Easy Answer: Corporation tax plus Dividend tax is a lot less than PAYE income tax plus Employer NI plus Employee NI.

I've no truck with anyone that chooses to pay themselves like that. However they need to understand that they are treating themselves as investors by doing so and with that comes a level of risk. The news was full of people that failed to understand that concept and expected the government to support their dividends payments through the pandemic.

I agree. When I was a contractor I took a sensible salary and made employer pension contributions - due to IR35.

NedS

Ultimately this is about the Chancellor raising more tax to pay for the pandemic. The first step of that process should be to close commonly exploited loopholes to ensure people are paying the intended levels of taxation, be that people/companies avoiding NI through salary sacrifice schemes or self employed people avoiding NI and income tax by opting for corporation tax and dividends which are taxed at more favourable rates. The second step should be to introduce increased taxation using methods such as the proposed reduction in higher rate pension tax relief with a universal flat rate, or by increasing taxes such as income tax, inheritance tax, VAT, fuel duty etc.

zagfles

Anonymous101 said:

garmeg said:

MDMD said:

Anonymous101 said:

badmemory said:

Rather than messing with pensions why not just stop people from taking lower than tax & NI amounts out of their businesses & taking it in dividends instead.  It would also stop them from whinging that they couldn't live on their furloughed income.  The world is full of unintended consequences!

I upset a couple of friends of mine by talking through that issue with them. Unfortunately it seems most self employed people are happy to be treated as investors when it comes to benefitting from the lower taxes they attract on receipt but don't like to be treated as investors when it comes to the level of income support they attract. Unfortunately you can't have it both ways.

One argument that is trotted out for why they do this is because they can’t pay themselves a Normal monthly salary due to variations in profits. But I don’t understand why they couldn’t just pay a bonus (via PAYE) to themselves when circumstances allow, even if that is just on the last day of their financial year.

Easy Answer: Corporation tax plus Dividend tax is a lot less than PAYE income tax plus Employer NI plus Employee NI.

I've no truck with anyone that chooses to pay themselves like that. However they need to understand that they are treating themselves as investors by doing so and with that comes a level of risk. The news was full of people that failed to understand that concept and expected the government to support their dividends payments through the pandemic.

Indeed - so was MSE, a very long thread about the so-called "excluded" plus lots of others. Hypocrites who've benefitted for years by pretending earned income is unearned suddenly wanting that unearned income treated as earnings so they can get state support.

NedS

zagfles said:

Anonymous101 said:

garmeg said:

MDMD said:

Anonymous101 said:

badmemory said:

Rather than messing with pensions why not just stop people from taking lower than tax & NI amounts out of their businesses & taking it in dividends instead.  It would also stop them from whinging that they couldn't live on their furloughed income.  The world is full of unintended consequences!

I upset a couple of friends of mine by talking through that issue with them. Unfortunately it seems most self employed people are happy to be treated as investors when it comes to benefitting from the lower taxes they attract on receipt but don't like to be treated as investors when it comes to the level of income support they attract. Unfortunately you can't have it both ways.

One argument that is trotted out for why they do this is because they can’t pay themselves a Normal monthly salary due to variations in profits. But I don’t understand why they couldn’t just pay a bonus (via PAYE) to themselves when circumstances allow, even if that is just on the last day of their financial year.

Easy Answer: Corporation tax plus Dividend tax is a lot less than PAYE income tax plus Employer NI plus Employee NI.

I've no truck with anyone that chooses to pay themselves like that. However they need to understand that they are treating themselves as investors by doing so and with that comes a level of risk. The news was full of people that failed to understand that concept and expected the government to support their dividends payments through the pandemic.

Indeed - so was MSE, a very long thread about the so-called "excluded" plus lots of others. Hypocrites who've benefitted for years by pretending earned income is unearned suddenly wanting that unearned income treated as earnings so they can get state support.

Yes, I have little sympathy given such people are probably still better off overall - they have probably saved more in the last 10 years by avoiding higher taxation rates than they have lost by missing out on HMRC SEISS grants or furlough payments. IMHO the Chancellor was right at the beginning when he said if you want the same level of support as PAYE workers then you must expect to pay the same level of taxes.

molerat

Be careful what you are saying people, the reporting police are about getting posts removed for saying anything they don't approve of under a be nice to all moneysavers pretext. This one is likely to go the way of the above mentioned thread !

Anonymous101

molerat said:

Be careful what you are saying people, the reporting police are about getting posts removed for saying anything they don't approve of under a be nice to all moneysavers pretext. This one is likely to go the way of the above mentioned thread !

Thanks for the heads up - As I said in my post, no judgement from me. I was simply pointing out that paying yourself in dividends is treating yourself as an investor. That's fine by me so long as they understand the rub.