You might also be interested in
Replies (4)
Please login or register to join the discussion.
"At the other end of the spectrum, there can be no real justification for the massive tax (it is!) advantage that those operating via self-employment (often for little more than cosmetic reasons and tax savings) enjoy when compared to employees."
Can you elaborate on this point? At the moment sole traders operate under the same income tax rates as employed people and enjoy a 3% Class 4 NIC advantage, while having to pay £2.80 per weel Class 2 NIC.
Hardly strikes me as a massive tax advantage?
Employer NI, albeit mitigated by tax relief on cost of same to the employer .
The catch is we are really comparing apples and pears with very different yields of fruit, albeit with state pension changes etc the yields have closed.
My own view is there ought to be a way of creating some form of hybrid entity through which small business could operate with a much simpler distinct tax code and accounts disclosure code. The main catch is probably not the idea but the issues re friction issues when the entity develops and crosses some arbitrary drawn line into the world of larger corporate entities and their more complex tax and legal compliance regime,
Frankly not needing to worry whether a sole trader/partnership/limited was the correct vehicle, and having a simpler one size fits all would imho be a real benefit.
The sort of beast would be akin to a partnership/ limited hybrid, it pays its own particular tax/ NI combined rate on its profits and then distributions carry a credit towards the individual's further liability or repayment, but it also has partnership flexibility as to how profits post tax are allocated ,thus liberating from the restrictions re share ownership rules.
Phil, like all chancellors, fiddles at the edges rather than making a mark on history by creating anew the correct, low legislation, environment for smaller entities to flourish with their own targeted tax rates and tax code.
Tax in this country is akin to fishing, instead of a small size 14 Peter Ross for a small brownie they Spey cast in an enormous Jock Scott tubefly and wonder why the fish get startled.
All I have to say on the subject is that we have had a little look at the next Tory leader. Watch out TM.
"Judging by responses to the lunchtime live event on AccountingWEB, many subscribers are aghast at the changes that have been made, believing that life is hard enough for those forced into operating through companies by government departments and other powerful non-employers, without adding an extra 1% in each of the next two years to their Class 4 NIC bills."
I dont understand this paragraph at all!
Can someone explain it to me? Is it because of the new public sector IR35 malarky? But it cant be because that involves applying Paye.