dividends, the budget
Discussion
There are still tax advantages in paying dividends over salary. For starters, Employers and Employees National Insurance is still not due on dividends. The 19% extra Corporation Tax on dividends more or less restores the situation to what it was before Gordon introduced the Zero % Corporation Tax rate few years ago. However, It appears to be a very clumsy and inefficient way of "fixing" his problem and there are some finer details which have yet to be explained.
The full "rules" are expected to be issued on 8 April.
The full "rules" are expected to be issued on 8 April.
dcw@pr said:
take £100k and your still £1900 worse off
etc
Not quite - under the old system (and the new one) when you earn over £50k, then you pay tax on the first £10k anyway, so people over this borderline are totally unaffected by the new laws.
bah, went too far on my point
Graham said:
Dontlift said:
What did they do on the vans front, i have been looking at gettig one
blanket 3k off you allowance and 500 quid off the allowance for fuel..
as far as i can work out.
Is this immediate or from 2007 as I have read elsewhere?
OK found it all
Theiving Robbing Scum said:
The Government has announced a 'major' deregulation of company van taxation.
Under the current rules, the benefit charge payable for a van available to an employee for private use is £500 (or £350 for a van that is four or more years old at the end of the tax year), a law that has been in place and unchanged since 1993. The charge also includes any private fuel provided.
The change announced today sees scale charges based on the type of private use introduced with a new charge for employer provided fuel. From 6 April 2005 employees who have to take their van home and are not allowed other private use will not have to pay a benefit tax charge. Where private use is unrestricted the existing £500 or £350 scale charge will apply dependent upon the age of the van.
However, from 6 April 2007 the discount for older vans will be removed and the scale charge for unrestricted private use will increase to £3,000. If an employer provides fuel for unrestricted private use an additional fuel charge of £500 will also apply.
Self-employed van drivers are not affected by these new rules.
Emergency Service Vehicles
Emergency service workers, such as fire and ambulance personnel, who are required to take their vehicles home at night so they can respond quickly to emergencies will now no longer have to pay tax and National Insurance on this 'operational requirement'.
I wonder which definition of self-employed they are using this week.
>> Edited by dontlift on Wednesday 31st March 09:04
It was the Ni i was worried about..
the tax benifit on the first 10k was an unexpected bonus and i didnt think tat would last too long ( stupid fecker that brown chap)
the bit i carnt quite get my head around is the retained profit bit...
say the comapny makes 20k profit and pays 20k divi, ok the company then pays 19% on the whole 20k
but if the comapny makes 30k profit pays the 20k divi and retains 10k would it still get the 10k allowance and only pay the 19% on the 20k divi as would have been the same undedr the old rules ?
G
the tax benifit on the first 10k was an unexpected bonus and i didnt think tat would last too long ( stupid fecker that brown chap)
the bit i carnt quite get my head around is the retained profit bit...
say the comapny makes 20k profit and pays 20k divi, ok the company then pays 19% on the whole 20k
but if the comapny makes 30k profit pays the 20k divi and retains 10k would it still get the 10k allowance and only pay the 19% on the 20k divi as would have been the same undedr the old rules ?
G
PetrolTed said:
So for the sake of argument over the course of the year, if you have £20K to take out is it still more tax efficient to take it as dividends rather than salary (assuming you're already taking a salary)?
IMHO Yes.
I really upset myself during it, as I interpreted it as 19% accross the board, on every dividend.
i WAS seriously considering PAYE again then.
But given its just on the first £10k, all it means for most small businesses is £1.9k less in the directors pockets. Still more than PAYE tho.
Eric Mc said:
There are many unanswered question on how this special 19% Corporation Tax on distributed profits is really going to work. There is a strong moral argument that introducing a law on 1 April and only releasing the details of that same law 7 days later is a tad unfair.
Unfair, Gordon Brown Never!!!
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