Would they not just get this right? PAYE vs LTD Co.
Discussion
Several newspapers yesterday and this article on the beeb site keep banging on about folk getting paid through limited companies instead of via normal permanent employment methods. Now, don't get me wrong, there is a debate to be had, but....
Why don't they get their facts right instead of harping on about 20% corporation tax rate? The way things stand, if you pay yourself via a limited company and use dividends you only really get to use this rate for earns below the higher income tax band and HMRC take a pretty dim view if you don't pay yourself some sort of salary (which PAYE will be due on) and don't get me started of Employers NI.
Seems to me that it's just more socialist/envyist propaganda trying to sway public opinion by misrepresenting the facts, hell!, if Red Ken can do it, why can't I?
ETA: Plus 20% is the Small Profits Rate
Why don't they get their facts right instead of harping on about 20% corporation tax rate? The way things stand, if you pay yourself via a limited company and use dividends you only really get to use this rate for earns below the higher income tax band and HMRC take a pretty dim view if you don't pay yourself some sort of salary (which PAYE will be due on) and don't get me started of Employers NI.
Seems to me that it's just more socialist/envyist propaganda trying to sway public opinion by misrepresenting the facts, hell!, if Red Ken can do it, why can't I?
ETA: Plus 20% is the Small Profits Rate
Edited by TeamD on Tuesday 13th March 10:49
I just hope the people on PAYE are gradually waking up to realise they are the ONLY people in UK who bear the full brunt of taxation.
A PAYE earner with family outgoings who can't afford to do his ISA every year, can't afford to avoid Income Tax by paying extra pension contributions and has no investments so can't use the annual Capital Gains Tax exemption is easy pickings for the Chancellor.
PAYE and VAT are the government's two big money-makers, both sliced off without the slightest opportunity for Joe Average to duck into some clever avoidance scheme.
A PAYE earner with family outgoings who can't afford to do his ISA every year, can't afford to avoid Income Tax by paying extra pension contributions and has no investments so can't use the annual Capital Gains Tax exemption is easy pickings for the Chancellor.
PAYE and VAT are the government's two big money-makers, both sliced off without the slightest opportunity for Joe Average to duck into some clever avoidance scheme.
pilchardthecat said:
They don't enforce the IR35 rules.
It's very easy to run a Ltd company, pay yourself £5k/year PAYE and take everything else as dividends at corp tax rate.
Errr... and don't forget that if your personal dividends take you into the 40% rate you will be paying extra personal tax over and above the corp rate tax.It's very easy to run a Ltd company, pay yourself £5k/year PAYE and take everything else as dividends at corp tax rate.
So not quite as simple as you state.
I put aside 30% of my invoice values to cover tax / NI / Corp and Personal Tax liabilities. This seems to have comfortably covered these bills over the last few years , but without leaving me a whole lot of spare cash in that 30% pot each year.
So based on my situation (single) 30% seems to be how much of your earnings you're gonna hand over. If you were married the the percentage could be reduced towards 25% as the dividends could be split between the married couple.
pilchardthecat said:
They don't enforce the IR35 rules.
It's very easy to run a Ltd company, pay yourself £5k/year PAYE and take everything else as dividends at corp tax rate.
Are you not forgetting that is only up to £43k os so.It's very easy to run a Ltd company, pay yourself £5k/year PAYE and take everything else as dividends at corp tax rate.
Then its 10%, 20%, 30% and so on, that gets charged on the dividends.
Also you have to sort out your own insurance (liability and public), dental, bupa, your own pension.
why do some people think its just pay little wage and then take everything else as dividends... Its not and never has been!!
Du1point8 said:
why do some people think its just pay little wage and then take everything else as dividends... Its not and never has been!!
Becuase people read the newspapers and get a fully informed analysis of the situation. 
Oh, don't forget sick and holiday pay as well, that's all included in the day rate.
doogz said:
I'm not getting my knickers in a twist, i'm a contractor operating through a limited company. I deleted my post, because it wasn't entirely accurate regarding higher rate tax, and i didn't want to cause any more confusion, nor could i be bothered fixing it.
Cheers
No worries, I deleted my reply. To be honesty I still get confused about how the above corp tax payments are worked out... my accountant works all that and just tells me what to pay.Cheers
Piersman2 said:
Du1point8 said:
why do some people think its just pay little wage and then take everything else as dividends... Its not and never has been!!
Becuase people read the newspapers and get a fully informed analysis of the situation. Oh, don't forget sick and holiday pay as well, that's all included in the day rate.
thehawk said:
I thought one of the few benefits of having a Ltd company was you could split the income with your wife (assuming she wasn't working) and pay less tax overall
Great if you have a stay at home wife, but most of the people I know have an OH who likes to work and earn their own money.thehawk said:
I thought one of the few benefits of having a Ltd company was you could split the income with your wife (assuming she wasn't working) and pay less tax overall
You can split it with anyone you choose to employ....hmmmm....maybe I should employ a personal slave and exploit their tax benefits 
Doh! Already do, that's what Cazzer is for
TeamD said:
doogz said:
I'm planning on using this "technique" to pay back my mother the money i owe her.
My mother is my bookkeeper etc (quite honestly is too!) to I already pay her a wage (PAYE) 
Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff