Budget tax increases
- duke63
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Budget tax increases
There were quite a few stealthy tax increases in the budget which don't seem to have got much publicity.
Small businesses where the owners pay themselves partially in salary and partially dividend are being hit very hard indeed. If you only earn up to the limit of base rate tax then you will have to find an extra £2,000 tax next year. I think some of this is to negate the IR35 rules and the way these rules have been abused by people in the public sector selling their services back to the government. Its a very hefty tax increase though on those who genuinely run their own small business.
Also i suspect some of this is to pave the way to do away with separate tax and NIC rates and just have one rate of charge for both.
Equally new cars registered next year will have to pay £140 per annum road tax and if the car costs more than £40k new then you will have to pay an extra £310 road tax per annum for 5 years.
Think its all a sign of what a huge mess this country is in. Even with all these extra taxes and the cuts in welfare, we are not predicted to be back in surplus until 2020 and then by £10 billion and then only after running up at least another £100+ billion of debt.
Makes you wonder if our standards of living have already peaked.
Small businesses where the owners pay themselves partially in salary and partially dividend are being hit very hard indeed. If you only earn up to the limit of base rate tax then you will have to find an extra £2,000 tax next year. I think some of this is to negate the IR35 rules and the way these rules have been abused by people in the public sector selling their services back to the government. Its a very hefty tax increase though on those who genuinely run their own small business.
Also i suspect some of this is to pave the way to do away with separate tax and NIC rates and just have one rate of charge for both.
Equally new cars registered next year will have to pay £140 per annum road tax and if the car costs more than £40k new then you will have to pay an extra £310 road tax per annum for 5 years.
Think its all a sign of what a huge mess this country is in. Even with all these extra taxes and the cuts in welfare, we are not predicted to be back in surplus until 2020 and then by £10 billion and then only after running up at least another £100+ billion of debt.
Makes you wonder if our standards of living have already peaked.
- Kwacky
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Re: Budget tax increases
We've lived beyond our means since the 80s. A country with no natural resources is always going to struggle, even with a changing workforce and work sectors.
- D6Nutz
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Re: Budget tax increases
I did spot the increase in tax on dividends. That is really going to hurt us contractors a lot.
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- Rossgo
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Re: Budget tax increases
I don't understand the car tax part? So if your paying 20 or 30quid road tax now in a couple of years the lowests emissioned cars will be forking out £140 quid per year in road tax!? And I also took a quick look and the insurance premium tax is going up too...so insurance prices will rise, great!
- duke63
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Re: Budget tax increases
The new road tax is only relevant to new cars registered from April 2017.
I've tried to find any relevant information for bikes but not found it yet.
And yes every insurance premium you pay out will rise but at least 3.5% from November.
I've tried to find any relevant information for bikes but not found it yet.
And yes every insurance premium you pay out will rise but at least 3.5% from November.
- Rossgo
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Re: Budget tax increases
Ahh I see well thanks for the information. It's ridiculous...we now want to know what's going down!! We need more people in this country to share this debt with [SMILING FACE WITH OPEN MOUTH AND SMILING EYES]
- duke63
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Re: Budget tax increases
I think we can all be fairly certain bike tax will end up the same as cars with a uniform rate for all engine sizes.
- Rossgo
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Re: Budget tax increases
Hmm yes I can see that happening too. I can see all this getting too expensive very quickly soon. I may have to take up another hobby [SMIRKING FACE]
Re: Budget tax increases
D6Nutz wrote:I did spot the increase in tax on dividends. That is really going to hurt us contractors a lot.
Must say this one slipped by me.
Is this a general rule for all Ltd companies now no matter the size ? I know alot of lads who use this loophole and have considered it myself
- duke63
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Re: Budget tax increases
Yes all Ltd Companies where the owner pays themselves partly in dividends.
Dependent on how much you pay in dividends it could cost up to £2k per annum more in tax.
Dependent on how much you pay in dividends it could cost up to £2k per annum more in tax.
Re: Budget tax increases
I guess that's to stop people like me then. Or does this just offset the reduction in corporation tax ?
- duke63
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Re: Budget tax increases
You should still be better off than being self employed as long as you earn decent money.
Re: Budget tax increases
Is it possible to work out a threshold ? I think my mates pay around 2k accountant fees
- D6Nutz
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Re: Budget tax increases
Here's a good explanation of the changes to the dividends tax.
http://www.contractorcalculator.co.uk/d ... ained.aspx" onclick="window.open(this.href);return false;
http://www.contractorcalculator.co.uk/d ... ained.aspx" onclick="window.open(this.href);return false;
You never really learn to swear until you learn to drive.
If everything seems under control, you're not going fast enough - Mario Andretti
If everything seems under control, you're not going fast enough - Mario Andretti
- D6Nutz
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Re: Budget tax increases
Computer programmer / web developer.
Been programming for 15+ years, switched over to the dark side of contracting 4 years ago.
Been programming for 15+ years, switched over to the dark side of contracting 4 years ago.
You never really learn to swear until you learn to drive.
If everything seems under control, you're not going fast enough - Mario Andretti
If everything seems under control, you're not going fast enough - Mario Andretti
- duke63
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Re: Budget tax increases
Not sure their figures are exactly perfect though i don't think there is a lot wrong with what they say.D6Nutz wrote:Here's a good explanation of the changes to the dividends tax.
http://www.contractorcalculator.co.uk/d ... ained.aspx" onclick="window.open(this.href);return false;
I personally recommend that clients pay a little national insurance through their salary by paying more than the £8k that recommends. Strictly speaking if you pay no NIC over a number of years then HMRC may argue at some point that you have not paid enough NI to qualify for full state pension. Whether there is still a state pension in 20-30 years time is open to debate however.
Also by paying a little more salary the company would get further relief from its corporation tax bill which the article doesn't mention. It needs the government to firm up their figures and state exactly how this will work before making a definitive statement.