IR35 to be abolished
Discussion
www.contractoruk.com/item/10459
Anyone know anymore about this? About 60% of my income is currently caught under IR35 so does this mean I am going to be better or worse off??!!
Knowing the IR, I suspect it is the latter!
Anyone know anymore about this? About 60% of my income is currently caught under IR35 so does this mean I am going to be better or worse off??!!
Knowing the IR, I suspect it is the latter!
Unbelieveable!
As far as PSC's go there is no change, what IR591 encompasses is companies that were swerving IR35 by banding together.
Under IR591 any company with less than 5 directors cant swerve NI on dividends.
I'm gobsmacked, what could be the possible motivation for this? Surely its better to have companies making good money without directors wondering if they should sell on and open in another country...
As far as PSC's go there is no change, what IR591 encompasses is companies that were swerving IR35 by banding together.
Under IR591 any company with less than 5 directors cant swerve NI on dividends.
I'm gobsmacked, what could be the possible motivation for this? Surely its better to have companies making good money without directors wondering if they should sell on and open in another country...
Plotloss said:
I'm gobsmacked, what could be the possible motivation for this? Surely its better to have companies making good money without directors wondering if they should sell on and open in another country...
It allows the Government to increase the tax take without hitting "employees". Remember the self-employed and business owner is unlikely to be a Labour voter...
Do not panic - just yet. We are waiting to see what the Chancellor has to say in the March Budget. If, as the hints seem to be (and that is all they are at present) that small owner managed companies will be blocked from paying dividends, there will be an uproar of the highest order. Essentially the Inland Revenue will be telling large companies (i.e. the fat cats) to continue with their dividends but that small traders operating through companies will not be able to do so.
How to win friends and votes - NOT.
How to win friends and votes - NOT.
eric mc said:
Do not panic - just yet. We are waiting to see what the Chancellor has to say in the March Budget. If, as the hints seem to be (and that is all they are at present) that small owner managed companies will be blocked from paying dividends, there will be an uproar of the highest order. Essentially the Inland Revenue will be telling large companies (i.e. the fat cats) to continue with their dividends but that small traders operating through companies will not be able to do so.
How to win friends and votes - NOT.
Yes, but how many friends of politicians are small traders, and how many are directors of large companies?
It's clear that this government cares little for those who choose to go their own way in business. The Labour party is not their natural home anyway, so in electoral terms little is lost.
Some other thoughts which spring to mind:
- It's redistributive (or the politics of envy, to put it another way). Taking more from those who are doing & risking more to give to those who do not. It also fits very neatly into taking from those who don't vote Labour (on average) whilst the gov can easily stand up and say "it's redistribution at its best" or somesuch.
- It smacks of jealousy, looking at all those "well-paid IT fat-cats". Tall-poppy syndrome. Again.
- A vindictive act of retribution over the resistance to the farcical implementation of IR35. Also consider the FTV (fast-track visa) scheme, and who helps administer it.
- The goverment are so desperate to introduce another "stealth" tax that they'll invest vast amounts of money to introduce another poorly considered piece of tax legislation.
I'm an erstwhile software contractor, and it's patently clear that this government has had it in for us and our ilk from day 1.
Some other thoughts which spring to mind:
- It's redistributive (or the politics of envy, to put it another way). Taking more from those who are doing & risking more to give to those who do not. It also fits very neatly into taking from those who don't vote Labour (on average) whilst the gov can easily stand up and say "it's redistribution at its best" or somesuch.
- It smacks of jealousy, looking at all those "well-paid IT fat-cats". Tall-poppy syndrome. Again.
- A vindictive act of retribution over the resistance to the farcical implementation of IR35. Also consider the FTV (fast-track visa) scheme, and who helps administer it.
- The goverment are so desperate to introduce another "stealth" tax that they'll invest vast amounts of money to introduce another poorly considered piece of tax legislation.
I'm an erstwhile software contractor, and it's patently clear that this government has had it in for us and our ilk from day 1.
I assume the NI is only payable once the dividend's drawn? If so how about this for a workaround:
Draw enough salary to live on and let the cash accumulate in the company.
After five years or when you've accumulated a significant amount cash move abroad to a low tax regime for a year or so (April to April so you get a full tax year non-resident in the UK) and draw the dividend whilst you're non-tax resident.
Appreciate this will only work for freelancers that can afford to take one year off in five but would it work?
Also what about investing all of your company’s profits on company owned assets (property etc) and then liquidating the company on retirement whilst you’re non-tax resident?
Draw enough salary to live on and let the cash accumulate in the company.
After five years or when you've accumulated a significant amount cash move abroad to a low tax regime for a year or so (April to April so you get a full tax year non-resident in the UK) and draw the dividend whilst you're non-tax resident.
Appreciate this will only work for freelancers that can afford to take one year off in five but would it work?
Also what about investing all of your company’s profits on company owned assets (property etc) and then liquidating the company on retirement whilst you’re non-tax resident?
You could do that I suppose but if it became too prevalent the Chancellor might intoduce a tax on undistributed company reserves - the Irish Revenue Commssioners used to have such a tax.
I think it's time Gordon took off some of that Paternity Leave his government have just introduced.
>> Edited by eric mc on Friday 16th January 14:22
I think it's time Gordon took off some of that Paternity Leave his government have just introduced.
>> Edited by eric mc on Friday 16th January 14:22
Obtaining official tax residency in countries or territories outside the UK is not easy. It is usually not an option for anyone other than the wealthiest individuals or companies. Merely placing registered offices of companies abroad is far too simplistic to fool the tax man. There is a raft of legislation in place to stop people basing themselves or their businesses abroad whilst they themselves live and operate in the UK.
t1grm said:
After five years or when you've accumulated a significant amount cash move abroad to a low tax regime for a year or so (April to April so you get a full tax year non-resident in the UK) and draw the dividend whilst you're non-tax resident.
Appreciate this will only work for freelancers that can afford to take one year off in five but would it work?
But then you end up paying a ton of Corporation tax on retained 'profits' for the 5 years.
22% irrc lost ;(
IR591 is not *that* bad.
If the details leaked prove to be true, at least it should be black and white - not open to (mis)interpretation by consultants/contractors or the IR.
It is a lower tax burden that IR35. Depending on your circumstances, MUCH lower.
Prior to the legislation being formally announced all we can do is guess, but so far it looks like we will be generally better off - the few thousand I would have to pay under the leaked IR591 rules is peanuts compared to what IR35 could cost.
Most importantly, and just like IR35, I am sure there will be plenty of ways around it - 4 mates/family with miniscule shareholdings is the most obvious.
Or why not set up 5 companies, all of which own shares in each other?
If the details leaked prove to be true, at least it should be black and white - not open to (mis)interpretation by consultants/contractors or the IR.
It is a lower tax burden that IR35. Depending on your circumstances, MUCH lower.
Prior to the legislation being formally announced all we can do is guess, but so far it looks like we will be generally better off - the few thousand I would have to pay under the leaked IR591 rules is peanuts compared to what IR35 could cost.
Most importantly, and just like IR35, I am sure there will be plenty of ways around it - 4 mates/family with miniscule shareholdings is the most obvious.
Or why not set up 5 companies, all of which own shares in each other?
Bastards Bastards Bastards Bastards Bastards
This obsession with taxing everyone is driving me mad
They only go and waste all the money collected anyway!
Corporation tax, VAT, Employee NI, Employer NI, personal tax, higher rate tax, insurance tax, stamp duty, car tax, fuel duty, it's a wonder any of us have any money left at all
This obsession with taxing everyone is driving me mad
They only go and waste all the money collected anyway! Corporation tax, VAT, Employee NI, Employer NI, personal tax, higher rate tax, insurance tax, stamp duty, car tax, fuel duty, it's a wonder any of us have any money left at all
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