Non-partisan mini-budget predictions thread

dunstonh

Is it though?........I'd be interested to see the workings to show how a company owner, taking £60000pa out of his business, will be around £5000 a year worse off just from Corp tax and dividend tax threshold changes.....

19% CT is going to 19% on the first £50,000, then 26.5% on next £200k and then 25% on rest.

An extra 7.5% on the corporation tax on £60k is £4,500
The dividend tax went from 7.5% to 8.75%.  An extra 1.25% is £750.   
A total of £5,250

The above assumes that the personal allowance is used by salary as it matches the primary threshold and at least £50k is left in the company but no more than £250k.

MK62

dunstonh said:

Is it though?........I'd be interested to see the workings to show how a company owner, taking £60000pa out of his business, will be around £5000 a year worse off just from Corp tax and dividend tax threshold changes.....

19% CT is going to 19% on the first £50,000, then 26.5% on next £200k and then 25% on rest.

An extra 7.5% on the corporation tax on £60k is £4,500
The dividend tax went from 7.5% to 8.75%.  An extra 1.25% is £750.   
A total of £5,250

The above assumes that the personal allowance is used by salary as it matches the primary threshold and at least £50k is left in the company but no more than £250k.

Notwithstanding the fact that the owner of a company making £60,000 would be unlikely to take it all as a dividend anyway (minus the CT due of course), either this tax year or next, I was under the impression that CT would be 19% on the first £50000, and then 26.5% on the next £10000, not 26.5% on the full £60000. 

Also, was dividend tax not already 8.75%.....changed by Rishi Sunak last year, effective from April 6th 2022?

kinger101

NedS said:

dunstonh said:

NedS said:

dunstonh said:

Millyonare said:

Today's budget is a disaster. As bad as feared.

Tax and axe.

A middle manager on ~£60k is set to pay ~£15k more tax over 5 years.

The war on wealth has just begun 😒

A company owner on a similar amount is around £5000 a year worse off just from Corp tax and dividend changes.

and how about if they choose to pay themselves by PAYE instead of by dividends?

Because they are the company owners.  They have risked their money and taken risk to build a company and typically company earnings are variable and don't work well with monthly PAYE.

Yes, I completely get that, but they don't have to pay themselves £5k/month - they can equally choose to pay themselves £60k through PAYE in March once they know what the company profits are looking like for the year, rather than paying corporation tax on that £60k and then taking a dividend. It's about the most tax efficient method of taking that £60k profit from the business.

If it's a one man band, the other option would be to choose the self-employed route (or a partnership if it's multiple people).  It would be unusual to set up a company and have yourself as the sole employee and extract the income by salary as it's the least tax-efficient option.

I don't accept that setting up a company is more necessarily more risky than working as self-employed or in a partnership set-up.  If anything, you're somewhat protected by the limited liability.  There are other good reasons for doing it 

LHW99

I don't accept that setting up a company is more necessarily more risky than working as self-employed or in a partnership set-up.  If anything, you're somewhat protected by the limited liability.  There are other good reasons for doing it 

Does tend to increase the base costs before there is any profit to think about paying yourself from, assuming there are any profits (not a given initially at any rate).

EthicsGradient

Millyonare said:

NedS said:

Millyonare said:

Today's budget is a disaster. As bad as feared.

Tax and axe.

A middle manager on ~£60k is set to pay ~£15k more tax over 5 years.

The war on wealth has just begun 😒

So who would you prefer to see paying for the cost of Covid, furlough and the war in Ukraine? Those with the broadest shoulders should expect to pay more. The more you earn, the more you will pay - that's always been how PAYE tax systems work.

I earn less than half that, and worked throughout Covid in an essential service keeping the country going whilst many were paid to sit at home. Any hope of a decent pay rise has been capped and I will be paying more tax as a result, but we always knew someone would have to pay for the handouts eventually. The time of reckoning has come - time to pay up buttercup.

Need to check the stats.

UK has the fastest-growing economy in the G7 (for 2 years straight), the second-lowest debt in the whole G7, state debt payments are relatively near their lowest levels in the past century, no other major country on Earth is raising major taxes after Covid, many are cutting them.

This is a reckless budget, with a reckless tax raid, shoving the country toward (needless) self-inflicted recession.

Well, if we do check the stats, we find that the UK has the median debt in the G7, compared to GDP (https://data.oecd.org/gga/general-government-debt.htm - Germany, France and Canada are smaller), and our "2 year fast growing economy" is because we're recovering from a bigger fall at the start of Covid - take the 3 year figure, which takes us back to pre-covid, and we're 6th out of 7 (Japan is lower - both of us are still below the GDP 3 years ago - Japan 2.4% down, us 0.4% down - from https://stats.oecd.org/index.aspx?queryid=350 ; the other 5 have grown over the 3 years).

I'm not sure what this unrealistic boosterism is meant to achieve on this board.

cricidmuslibale

Perhaps the title of this thread should by now have been amended to become:
‘Non-partisan mini budget reactions thread’?
Just a small suggestion with the intention to be helpful.

mebu60

cricidmuslibale said:

Perhaps the title of this thread should by now have been amended to become:
‘Non-partisan mini budget reactions thread’?
Just a small suggestion with the intention to be helpful.

He didn't scrap HS2! Nor order a review of it, non-partisan or otherwise.

The media focus seems to be on the 'squeezed middle'. Presumably because that's them personally. 

Malthusian

mebu60 said:

The media focus seems to be on the 'squeezed middle'. Presumably because that's them personally. 

...and most of their readers. And the people who buy things from their advertisers.
And the segment of the population that can reliably be tapped up for extra tax. (The poor don't have any money to tax and the money of the rich is too mobile.)
And they are the most neurotic about money (rich = too well insulated, poor = too easy come easy go) and therefore most likely to click on a headline reading "Autumn Statement: how worried should you be?"

kinger101 said:

I don't accept that setting up a company is more necessarily more risky than working as self-employed or in a partnership set-up. 

I don't think anyone's really asserted that. The original point was that business owners are taking more risks than employees which is indisputable.
Directors of one-man bands and small companies are often required to give personal guarantees in any situation where the limited liability status of the company would actually be useful. 

cricidmuslibale

mebu60 said:

cricidmuslibale said:

Perhaps the title of this thread should by now have been amended to become:
‘Non-partisan mini budget reactions thread’?
Just a small suggestion with the intention to be helpful.

He didn't scrap HS2! Nor order a review of it, non-partisan or otherwise.

I am absolutely with you on this issue! In my opinion HS2 has been a terrible waste of public (taxpayers) money and, even worse as far as I’m concerned, there has been an appalling and unforgivable loss of ancient woodland and much other completely unnecessary, irreparable desecration of the surrounding countryside due to its construction so far!

mebu60

cricidmuslibale said:

mebu60 said:

cricidmuslibale said:

Perhaps the title of this thread should by now have been amended to become:
‘Non-partisan mini budget reactions thread’?
Just a small suggestion with the intention to be helpful.

He didn't scrap HS2! Nor order a review of it, non-partisan or otherwise.

I am absolutely with you on this issue! In my opinion HS2 has been a terrible waste of public (taxpayers) money and, even worse as far as I’m concerned, there has been an appalling and unforgivable loss of ancient woodland and much other completely unnecessary, irreparable desecration of the surrounding countryside due to its construction so far!

It was quite scarring to see the actual massive scarring in just one small part of the Chilterns when visiting friends the other weekend.