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It is up to the self employed how much holiday they take, tax is based on annual earnings and is not dependant on how many weeks in benidorm someone has.
Not sure if that's directed at me FF, but Gonefishin was querying the impact on pension & isa funds. A fund that receives dividend income on a share it holds as part of a mutual fund is not suddenly going to see an increase in the dividend receipt to the "gross" level, so there will be no impact to the value of those funds.
Any type of tax payer that receives more than £5k in dividends a year is going to have to pay more tax - 7.5% more than they do currently.
Of those that receive less than £5k in dividends a year, basic rate tax payers will see no change to their tax position and higher rate payers will avoid the 25% additional payment they are currently obliged to make.
[i]Yes they do, it's just built into the rate that they are paid. Another way of looking at it is that regular employees have money deducted from their pay to account for those things. [/i]
Yes.
However, in my experience the real difference between contract or an employee is security.
Recently, in an office I was working in, 80% of contractors were simultaneously given notice. If any employees have to go, then it's a whole different ball O'wax.
Not complaining or taking sides, just saying like.
However, in my experience the real difference between contract or an employee is security.
Sounds more like temps than contractors, could some of those fall foul of the disguised employee rules?
However, in my experience the real difference between contract or an employee is security.Recently, in an office I was working in, 80% of contractors were simultaneously given notice. If any employees have to go, then it's a whole different ball O'wax.
Not complaining or taking sides, just saying like.
True, but it's not always the case. We got rid of a few staffers here and kept contractors. I always looked at it like the difference in security was 1 week vrs 4 weeks, and yes I've been both staff and contract.
= not contractorskept contractors
[i] mikewsmith - Member
kept contractors
= not contractors [/i]
Not necessarily, some cons have unique, specialist, knowledge or skills, and only attend site for a few days a week / at a time.
It's a genuine business strategy, to make yourself or your company/product/services, essential to your customers. At the risk of the phone not ringing, at all. It's not for everyone.
Probably.Sounds more like temps than contractors, could some of those fall foul of the disguised employee rules?
However, in my experience the real difference between contract or an employee is security.
Again, built into the rate. I'm paid ~£20/hour, contractors get paid £55+, I get 4 weeks off a year, maybe a few days sick and the wishful thinking* that the contractors will be made redundant before I am.
The taxman shouldn't be rewarding risk, if anything it should probably disincentivise it. Someone earning and paying tax is better than someone earning and paying less tax then becoming jobless.
*as above, plenty of people here are just good at their own niche so get through even the worst of times as contractors because there isn't a staff person who can do that job.
I have been made redundant twice, both times I got the statutory minimum payout, which was 2 weeks pay. Many contractors would have more security and notice built into their contracts.
[i]Again, built into the rate.[/i]
[i] Solo - Member
Yes;
Not complaining or taking sides, just saying like. [/i]
[i] thisisnotaspoon - Member
The taxman shouldn't be rewarding risk, if anything it should probably disincentivise it. Someone earning and paying tax is better than someone earning and paying less tax then becoming jobless. [/i]
I disagree, with what sounds like an overly simplistic view. Who does your accounts? I employed people for that and other business related services/requirements.
I'll not get dragged into an argument if I can help it. Depending on your agenda you can argue it either way, as so often happens on here.
Ime/o, contractors do and should take the bullet before employees do, it goes with the territory and was certainly the case in my post above ^.
I have been made redundant twice, both times I got the statutory minimum payout, which was 2 weeks pay. Many contractors would have more security and notice built into their contracts.
I just faced this exact situation, 2 weeks pay, capped at £475 (dodged the bullet though).
Which is exactly why I'm now looking for contract work. Why would I want to work for an employer who values staff so little? Previous employment mainly thru US companies - they at least seem to look after you if they let you go.
I could have more money saved after one month contracting than any future redundancy payout.
"MSP - Member
Good rant, suitably idiotic and completely wrong, as we have come to expect from you."
Well it might not be relevant to contractors but it is totally relevant to Company Directors of SME's
"MSP - Member
I have been made redundant twice, both times I got the statutory minimum payout, which was 2 weeks pay. Many contractors would have more security and notice built into their contracts."
I'm sorry to hear that, but the directors owners of the unfortunate concerns that failed, do you think they were able to claim statutory minimum payout, as they lost their house as well as their business?
It's simply a question of risk reward, and that ratio has been irrevocably eroding in favour of the man/state/bank/ for a considerable number of years now.
I fail to see what exactly you consider 'idiotic' other than it was couched in [rant] [/rant] parenthesis.
I'm sorry to hear that, but the directors owners of the unfortunate concerns that failed, do you think they were able to claim statutory minimum payout, as they lost their house as well as their business?
They didn't fail, they laid people off and gave themselves nice fat bonuses for doing so. Do you think ex employees don't lose their houses, their families when they lose their jobs?
I fail to see what exactly you consider 'idiotic' other than it was couched in [rant] [/rant] parenthesis.
Because you seem to think that being an employee is easy gold paved street, and that we (the employed) should subsidise your life, you have a complete sense of entitlement.
You also seem to think that anyone who isn't self employed is a civil servant, who you may have noticed have been losing their jobs by the 10's of thousands to fund tax concessions for the wealthiest. Many of those will have lost their homes, their families and just lost hope, some will have committed suicide because of the impact. But hey ho, that is a price worth paying as long as you get to dodge tax by hiding your pay as dividends.
They didn't fail, they laid people off and gave themselves nice fat bonuses for doing so.
Having seen many rounds of redundancy in the last 20 years, it's only the worker bees who get shafted, those at the top normally do fine out of it.
I can understand that the government want to clamp down on disguised employment contractors but changes in dividend will cost genuine freelancers, consultants, and small business owners several thousand pounds a year.
It will effect anyone who disguises earnings as dividends, I don't see why you feel a clampdown is justified on contractors but not anyone else using the same tax dodge.
I don't have time to read all the replies (time is money, chop chop, etc.) but my accountant has been in touch to suggest we'll be a few hundred quid a year poorer as directors of a small Ltd Co.
Not complaining, I'd probably have done the same thing if I was chancellor. It's probably one of the only sensible things he's done in fact.
Previously as a contractor as long as your salary and dividend add up to less than when higher-rate tax kicks it was very tax efficient - without reading the 'words', will this still be the same?
MSP, speak your mind fella, stop sitting on the fence
I can understand that the government want to clamp down on disguised employment contractors but changes in dividend will cost genuine freelancers, consultants, and small business owners several thousand pounds a year.
If you're using dividends to pay yourself in this circumstance then either:
a). You're just fattening your bank account by avoiding tax (I have zero sympathy)
b). You're not good enough at what you do so need to drop your rates vs your competition and you use dividends to make up for this (I have zero sympathy)
c). You're in a highly competitive industry where everyone is doing this so you're forced to follow suit to get any work (the market will correct itself as everyone will be in the same boat, so again I have zero sympathy).
You're not good enough at what you do so need to drop your rates vs your competition and you use dividends to make up for this
? sorry i dont understand this?? from my point of view (as a LTD co freelancer) the business (me) earns money and i only pay myself what i need to run my life (mortgage/food/bills). what has being “not good enough” and paying myself more dividends got to do with this?
or have i misunderstood your POV? 😕
Hmm, I never get this debate.
I pay corp tax at 20% (same as if I was paying Paye).
I pay some N.I
I don't actually pay tax on my dividends but we have already paid C.T on the profits.
I'm not a higher rate tax payer.
The only thing we don't pay is class 4 N.I
So I'm not sure how I'm avoiding tax?
We moved from a partnership to a LTD so we didn't have to keep paying tax on account (try explaining that one to someone who doesn't work for themselves.)
Hmm. Looks like my considerations to go contracting in the next couple of years are looking potentially less remunerative than they might have been.
Am going to watch this space, but the ability to have only a single tax charge (CT and the divi tax relief) looks like it's now been replaced by a double tax charge (after the 5k divi zero tax rate) all the way.
I'll chat the contactors working for me to get their take on it.
[i]I'll chat the contactors working for me to get their take on it. [/i]
You best hope they understand the current situation and proposed changes better than contractors I work with, not to mention most of the contributors to this thread...
You best hope they understand the current situation and proposed changes
True. I doubt it, but then I'll ask them what they're planning to do about it.
With luck(!) they're not still working for me next April, otherwise I fully expect their rates to go up.....