dividend tax - government on the grab
Discussion
anyone who is self employed should really be signing this...
https://petition.parliament.uk/petitions/106525
https://petition.parliament.uk/petitions/106525
I can see what they're doing. It makes sense from the point of view of a tax collector although it will cost some people money. It seems to me that self-employed people can still pay less tax than if they were an employee of somebody else's company albeit the margin between the two will be reduced.
It's nothing to do with the "Self Employed" people. The Self Employed pay Income Tax (and Class 4 NI) on the profits their self employed business generates. There have been no fundamental changes to the way self employed people are taxed.
This relates to those who pay less tax (and no NI) because they receive money from limited companies in the form of dividends. It affects EVERYBODY who has substantial dividend income - whether the dividends they receive are from a company they substantially own or manage or a company of which they have little or no control.
This relates to those who pay less tax (and no NI) because they receive money from limited companies in the form of dividends. It affects EVERYBODY who has substantial dividend income - whether the dividends they receive are from a company they substantially own or manage or a company of which they have little or no control.
Simpo Two said:
If you think about it, it's a remarkable loophole. Income should be income.
There is a genuine reason why HMRC differentiates between "Earned" income and "Investment" income. "Earned" income is also subject to NI contributions on top of any tax. If you wanted all income treated the same, you could have the weird situation of people having to pay NI on bank interest received, rental income or even dividends. Eric Mc said:
There is a genuine reason why HMRC differentiates between "Earned" income and "Investment" income. "Earned" income is also subject to NI contributions on top of any tax. If you wanted all income treated the same, you could have the weird situation of people having to pay NI on bank interest received, rental income or even dividends.
Which is why in this day and age and with no tax hypothecation, the whole concept of NI is ridiculous. Your scenario isn't really that weird, lots of people now make money from BTL rather than working, surely the income should be subject to the same tax treatment?
Eric Mc said:
Maybe we need a more complex definition of "investment income".
To me, an investment is using money to make money.
"Earnings" is creating money by the sweat of one's brow.
I run everyday and it doesn't generate me a penny of income despite a profusely sweaty browTo me, an investment is using money to make money.
"Earnings" is creating money by the sweat of one's brow.
Driving a desk earns the pennies (and I die a little bit more every day). 
sgrimshaw said:
What they really need to do is simply close the loophole whereby income tax and NI is avoided by running what is essentially a sole trader business as a company and extracting "drawings" as "dividends".
I'm all in favour of it, it's been enjoyed for long enough.
That's rubbish.I'm all in favour of it, it's been enjoyed for long enough.
Many Ltd have more than one shareholder.
PurpleMoonlight said:
That's rubbish.
Many Ltd have more than one shareholder.
And many do not ... and they're the ones you know I'm referring to.Many Ltd have more than one shareholder.
Where the ltd company exists primarily to avoid income tax then it is essentially a loophole which in time would perhaps inevitably have been closed.
Not saying the new legislation is the best way to that, but it will go some way to achieving it.
Downside is that it impacts true "investors".
It really sucks, I am a small one man band Ltd company and already pay way more tax than needs be. People seem to forget that these small business owners may also be paying VAT and business rates and probably many more that I am not aware of!
Governments should be looking at reducing business overheads rather than extra taxing, all that happens is the cost gets passed on down the line to the end user...
Governments should be looking at reducing business overheads rather than extra taxing, all that happens is the cost gets passed on down the line to the end user...
Edited by Mudgey on Monday 7th September 21:42
Mudgey said:
It really sucks, I am a small one man band Ltd company and already pay way more tax than needs be. People seem to forget that these small business owners may also be paying VAT and business rates and probably many more that I am not aware of!
Governments should be looking at reducing business overheads rather than extra taxing, all that happens is the cost gets passed on down the line to the end user...
I run limited companies and agree that there are a lot of taxes to pay, however you are incorrectly lumping VAT into that. The end users pay VAT, and all that a company does is collect it from them to pass onto the government.Governments should be looking at reducing business overheads rather than extra taxing, all that happens is the cost gets passed on down the line to the end user...
Mandat said:
I run limited companies and agree that there are a lot of taxes to pay, however you are incorrectly lumping VAT into that. The end users pay VAT, and all that a company does is collect it from them to pass onto the government.
That's debatable, it's a tax with a different set of rules.Mudgey said:
Mandat said:
I run limited companies and agree that there are a lot of taxes to pay, however you are incorrectly lumping VAT into that. The end users pay VAT, and all that a company does is collect it from them to pass onto the government.
That's debatable, it's a tax with a different set of rules.And for those crying foul, have you ever done the sums on the total tax paid (including NI) on 40,000 salary income and 40,000 dividends income? Might surprise you a little.
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