Great news in the budget

Great news in the budget

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Great news from GB in the budget. Corporation tax rate cut to 28%.
I predict another big rush of incorporations from the self-employed.
I shall certainly advise the remained of my self-employed clients to incorporate.
no excuse not to now with CT rates falling.
Tony Kelly

Replies (14)

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By AnonymousUser
21st Mar 2007 14:22

but he is as sly as ever with his income tax cuts
he reduces the headline rate of income tax to 20p in the £, but withdraws the 10p starting rate.
Surely, even he must realise that this is one of his more transparent stealth tax increases.
how could anyone contemplate having someone like this as leader of the country?

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By nick farrow
22nd Mar 2007 08:35

dividend rate
are divis received within basic rate still effectively tax free?

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By User deleted
21st Mar 2007 15:44

Budget 2007
For full coverage of the budget, visit the AccountingWEB budget zone.

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By tonyc
21st Mar 2007 14:39

But!!!!
The small co's rate will increase from 20% to 22% by 2009 - maybe not such a good idea to incorporate.

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By AnonymousUser
21st Mar 2007 16:31

Payments on account will now hit a lot earlier
Consider the self employed person with a profit of around 7 -8 K they are now likely to fall into the payments on account regime and could then be making a payment in the region of £1000 for their first tax payment under these rates. How does someone who only earns between 7 and 8 K find £1000 for Tax and NI?

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By User deleted
21st Mar 2007 15:09

read between the lines
I think you've summed up what Mr Brown was doing - he actually increased CT by 3% for the vast majority of companies, whilst making onlookers think he had decreased it by 2%. Who needs mirrors ?

Also, was it just me, or did I hear him say he had decreased CT from "33% to 28%" ? A 5% decrease sounded very good. Maybe he had just forgotten to mention the mysterious 3% increase !

And the increase for small companies from 20% to 22%. Blimey, I must have been doing all my tax comps wrong...I thought CT was 19%. Maybe, again, he had just forgotten to mention the previous 1% increase ! Still, at least it's not a proper incease, it's just to stop all us small companies "not paying our way".

The 3% increase and new 20% personal tax band means I am going to have to unincorporate an awful lot of mine.

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By TonyUK
21st Mar 2007 15:14

Budget Blues for low earners
If you earn around £7000 per annum then tax liability will double - how can this be helping the low paid. Over the past year small companies have seen the abolition of the £10000 threshold and now an increase to 22% presumably aimed at MSC's. However it is still benificial to pay part salary/dividend and save tax - unless they introduce NI on dividends at some point.

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By Brads.Kings
21st Mar 2007 15:29

Company benefit halved? Not quite
'Old rules'
Self employed tax rate 30% (22% BR + NIC)
Company 19%
Differential 11%
Max dividend £30k
Benefit £3,300

'Rules 2009'
Self employed tax rate 28% (20% BR + NIC)
Company 22%
Differential 6%
Max dividend £35k
Benefit £2,150

Brown has probably done enough to limit the attraction of incorporation, but if already incorporated does not make sense to switch back.

No need to NIC dividends (far too complicated imo)

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By brianmason
21st Mar 2007 15:29

Not good news...
Not good news at all. The increase to the small companies tax rate is not unexpected though. There is now no real tax incentive to incorporate companies making less than £300k any more so it comes down to commercial reality.

From HMRCs point of view they will be delighted with this as the chances of having to fight numerous individual cases relating to IR35 and S660a will decrease as those individuals won't incorporate for tax reasons any more.

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By Richardrussell
21st Mar 2007 15:34

NIC on dividends too complicated?

Remember NCD's!

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By AnonymousUser
21st Mar 2007 15:50

stealing from the poor...
... being the tax geek that I am, I worked out that under the new personal taxation rates, you only benefit from the "2% drop" once you earn just over 16000 p.a.

The worst hit is someone on about 8000pa, payinga whopping £160 a year more in tax.

Figures are approximate as I'm not sure on personal allowance for 0809 but still..... what a b@$tard, and people are going to be cheering about tax cuts? Not for those earning under £16k and thats a lot of people...


Will Working/ Families Tax credits be adjusted accordingly??

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By deanshepherd
22nd Mar 2007 07:23

Interesting..

"There is now no real tax incentive to incorporate companies making less than £300k any more.."

Really?! I think you need to do your sums again.

The tax credits available to low-earners are increasing to compensate for the loss of the 10% band. Although this will largely be directed towards single parent families. Low-earning, childless couples will certainly feel the pinch of this latest Gordon Brown PR campaign.

Raising the NI threshold under the guise of 'simplification' was masterful!

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By User deleted
22nd Mar 2007 12:39

Dividends
Yes they are.

Abolition of the 10% band applies only to "earnings and pension income", therefore tax credit on divis takes up part of BR band as usual.

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By nick farrow
22nd Mar 2007 15:26

thanks TBB
many thanks TBB

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