General Election Is On

[Paul Waine]

Why are you paying 12.5% on dividends when the rate is 7.5%?

And if you don't like the increase in corporation tax and dividend tax, you could always unincorporate and pay self-employed income tax on your earnings instead (as could the single mother in your example).

and when something goes wrong with your unincorporated business you can lose your house and everything else you own.

There's a very good, very sensible reason why limited companies exist.

Because employment tax rules are complex, there are also many potential clients who will not work with a consultant unless they use a limited company.

Plus, it's much more "professional" to have a limited company - and so much more flexible if your business grows to employ your own staff.

[RingoMcCartney]

Ian, you can not look at the last 10 years in isolation, you have to look at what was the route cause of the problem and understand the why, then look at the mitigations to the cause.

The route cause was people buying houses they could not afford, but they were allowed to by numerous institutions, well known banks and mortgage companies, people were greedy and grabbed for something they could not afford after a short time, it was in reality nothing more than a pyramid scheme on a world scale, perpetuated by well known names in the financial industry. The USA alone did not cause this, they were not driving the BoS and other UK financial institutes, the UK was somewhat late getting on the pyramid scheme and suffered more but a lot of well known financial institutes went to the wall, housing markets collapsed, stock markets nose dived etc. etc. but let's not blame the USA for all the ills of the world and the UK in particular. People caused it because they thought they would get something from it, just like you think the Billions being dangled by the Labour Party will provide you with more, and it may well in the long term, but you will pay for it one way or another.

It was not caused by Tories, nor by the Labour Gov. of the day yet it happened on there watch, no one else's, the last 10 years has been the whole country and much of the world paying for that scam, in the UK called austerity, something introduced that was very much needed, it's been painful for many. However when just starting to come out of this and getting to the point of losing the purse strings you and many others can see a whole chunk of money and you want it for no real thought of the consequences for the future and the next generation.

Almost certain to put us back in to another round of austerity to pay for all this when the Labour government are replaced if they ever get in to power, something I doubt but I worry about people like you and JC as he sells his pyramid scheme to you and millions.

Do not allow the blinkered lefties on here attempt to try and gaslight you with regards labours calamitous handling of the economy that lead to labours recession.

You remember the facts. You remember them correctly.

Labour embarked on what they called their "prawn cocktail offensive." As they shamelessly dropped all pretence to represent the working class and schmoozed upto their new found friends in the city of London

The city of London is seen by most as the epicenter of the global financial market.

Labour boasted of their "soft touch regulation" that meant it was a free for all in London. That actually happened.

There was consequently, a run on the banks. You witnessed queues round the block at Northern Rock. Scenes like that had not been seen for generations. It happened under labour. You actually saw it.

This myth perpetuated by responsibility denying lefties . Is that it was a " global phenomenon" had jack all to do with labours inept handling of the economy and more importantly their institutional turning a blind eye to the shenanigans their new few city fat cats were upto. Is just that, a myth. You remember correctly.

No doubt you'll recall with 100 % accuracy, Gordon Brown proclaiming,

"Labour has abolished boom and bust!!!!!"

Yes, he didactually say that.

Finally, as if any confirmation was needed. You will also correctly look back with horror when you think about the note that was left by the outgoing LABOUR treasury minister.


"IM AFRAID ALL THE MONEY'S BEEN SPENT!!!"


Dont fall the responsibility denying garbage, from those attempting to gaslight you about labours institutional economic incompetence.


Your memory is, unlike those that wish to rewrite history, is absolutely bang on the money.

[Dy1geo]

Hi Dy1geo, I agree with you about matching European health spending levels. Do you think we should adopt the health funding systems that most major European countries use as the best way to achieve this?

I personally would love Politics to be taken out of health, but realise it won’t be. With regards funding for health I am aware that in Europe it is not totally tax payer funded but still the state contributions are higher than the U.K.

As individuals we currently contribute in some ways I pay for my dental treatment and any prescriptions I may get now and would not be averse to contributing a small amount in other areas such as visiting my GP as long as the money was ring fenced back into the NHS. Some hard choices have to me made.

As a country where we spend our income is about choices and more as a % should be spent towards health which means cutting back in other areas.

Even though it would affect me I personally would freeze the higher rate tax thresholds for the next parliamentary term so tax can be raised through fiscal drag pay and directed to the NHS, the winter fuel allowance as part of pension income so richer pensioners pay tax.

[Tall Paul]

and when something goes wrong with your unincorporated business you can lose your house and everything else you own.

There's a very good, very sensible reason why limited companies exist.

Because employment tax rules are complex, there are also many potential clients who will not work with a consultant unless they use a limited company.

Plus, it's much more "professional" to have a limited company - and so much more flexible if your business grows to employ your own staff.

I know there are good reasons for limited companies to exist. However, many of them exist so that unscrupulous business owners can avoid having to pay their debts.

Pretty much the only reason small, one man band limited companies exist is to reduce the tax bill on the shareholder/director.

If it's such an advantage to run as a limited company rather than a sole trader, business owners shouldn't mind paying a bit more tax (I think they'd probably still pay less than an equivalent sole trader, although I haven't checked).

[Paul Waine]

So people should be allowed to pay less tax because they don’t get holiday pay or sick pay? So they essentially want tax payer funded sick pay and holiday pay.

Hi martin, so, when I was running my little business I was "blue lighted" to hospital, cancelled my business meetings for the rest of the week - then several weeks of recovery - and picked up my contract on a part time basis until the work was completed - about 3 months later. My business only got paid for the work I did. The only sick pay and the only holiday pay I got was what my business could afford to pay me. But, I wasn't earning, so that was "zero."

That's what being in business on your own can mean.

I know quite a few in the same situations.

But, no worries, if you know what you are choosing to do you get on with it.

[RingoMcCartney]

EVERY LABOUR GOVERNMENT HAS LEFT WITH UNEMPLOYMENT HIGHER WHEN THEY LEFT OFFICE, THAN WHEN THEY TOOK OFFICE

[Erasmus]

Ringo, that last one is such a silly post. Of course, Brown's prediction about boom and bust turned out to be nothing more than an empty slogan although it did seem reasonable it at the time. But the idea that Labour caused the economic crisis of 2008 is just ridiculous. It hit every country in the world just as hard and there would have been no difference whoever was in power. The real issue was deciding how to respond to it, whether or not the banks should be bailed out, and then how to deal with the hole in public finances. I just wish political debates could be conducted in a reasonable manner. Don't you think that would be a good idea?

[martin_p]

Hi martin, have you run your own limited company? I hope you weren't adopting that approach to your tax obligations.

My (small) business (before I closed it down), pay myself a salary, pay employer's and employee's NIC (if you are a director of your own business - which of course you are - NIC is annual cumulative), then calculate profit/loss - and pay corporation tax on any profit, then decide if there's any cash that can pay a dividend. Under the previous system, there was £5,000 tax free dividends, then it was reduced (Hammond) to £2,000, now Corbyn/McDonnell want's that reduced to zero - and tax all dividends received at your marginal tax rate. The reason for different tax rates on dividend income and other income is that you received dividends on profits that had already paid corporation tax - hence the governments used to follow the principle that they wouldn't tax the same income twice.

So did the majority of your income come through salary or dividend? I notice you don’t mention paying income tax.

[RingoMcCartney]

The NHS was 70 years old last year.

The tories have been in charge of it for around 44/45 of those years.

It's still here.


Any attempt to sell it would clearly be idiotic, permanent electoral suicide.

Labour introduced the mill stone around the NHS neck PFI initiatives that will financially burden the NHS for decades.

Dentistry used to be free on the NHS, while in office did labour reinstate free dentistry?

No

The optician used to be free on the NHS, while in office did labour reinstate free opticians?

No.

BURNLEY'S VERY OWN LOCAL A AND E UNIT WAS SHUT BY A LABOUR GOVERNMENT


I SUPPOSE THAT WAS DOWN TO TORY AUSTERITY!!

[RingoMcCartney]

Ringo, that last one is such a silly post. Of course, Brown's prediction about boom and bust turned out to be nothing more than an empty slogan although it did seem reasonable it at the time. But the idea that Labour caused the economic crisis of 2008 is just ridiculous. It hit every country in the world just as hard and there would have been no difference whoever was in power. The real issue was deciding how to respond to it, whether or not the banks should be bailed out, and then how to deal with the hole in public finances. I just wish political debates could be conducted in a reasonable manner. Don't you think that would be a good idea?

Just the first of the many predicted responsibility denying posts!

Save your breath. I couldn't care less about your reality ignoring opinions.

[Paul Waine]

I personally would love Politics to be taken out of health, but realise it won’t be. With regards funding for health I am aware that in Europe it is not totally tax payer funded but still the state contributions are higher than the U.K.

As individuals we currently contribute in some ways I pay for my dental treatment and any prescriptions I may get now and would not be averse to contributing a small amount in other areas such as visiting my GP as long as the money was ring fenced back into the NHS. Some hard choices have to me made.

As a country where we spend our income is about choices and more as a % should be spent towards health which means cutting back in other areas.

Even though it would affect me I personally would freeze the higher rate tax thresholds for the next parliamentary term so tax can be raised through fiscal drag pay and directed to the NHS, the winter fuel allowance as part of pension income so richer pensioners pay tax.

I lived in Netherlands. Health insurance is compulsory - as it is in many other EU countries. Health spending in EU countries includes the health insurance costs, including personal excesses. The figures quotes aren't just money paid by gov't/taxpayer was in the UK.

I've not read all this report (I will later). EU Healthcare expenditure statistics

https://ec.europa.eu/eurostat/statistic ... xpenditure" onclick="window.open(this.href);return false;

I've added underlines.

Summary:
This article presents key statistics on expenditure and financing aspects of healthcare in the European Union (EU). Healthcare systems are organised and financed in different ways across the EU Member States, but universal access to quality healthcare, at an affordable cost to both individuals and society at large, is widely regarded as a basic need; moreover, this is one of the common values and principles in EU health systems.
Statistics on healthcare expenditure and financing may be used to evaluate how a healthcare system responds to the challenge of universal access to quality healthcare, through measuring financial resources within the healthcare sector and the allocation of these resources between healthcare activities (for example, preventive and curative care) or groups of healthcare providers (for example, hospitals and ambulatory centres).

This article forms part of an online publication on Health in the European Union.

[Rick_Muller]

who put 50p in the dickhead again...?

[RingoMcCartney]

CORBYN

JOHNSON


It's a real shame that only ONE of them has to lose....

[RingoMcCartney]

who put 50p in the dickhead again...?

Who's opinion ain't worth twopence and is reduced to using fowl language and personal abuse. To whoever it happens to be aimed at!?

[RingoMcCartney]

BURNLEY A AND E.


SHUT BY THE LABOUR PARTY

[Paul Waine]

So did the majority of your income come through salary or dividend? I notice you don’t mention paying income tax.

OK, a little more info if you require it:

Everyone pays income tax on all the income you receive. It is all toted up and income tax is charged according to the rules.

The tax system has allowances and different treatments for different types of income.

Personal allowance, £12,500 - until you earn more than £100,000 when the allowance is withdrawn £1 for every £2.

Dividend allowance, currently £2,000 - a couple of years ago £5,000. JC/JMcD plans £nil.

National Insurance: charged on earnings per week/per month or, for directors, per year £8,500 (approx.). Employer pays 13.8%, Employee pays 12.0%.
(When you reach 65 and are still working NIC is not payable).

Pension income also added to your income tax payable.

Remember, I said my business was small. Remember, I also said that I was in hospital and ill for some time - and not earning through this period -(and no one paid me any sick pay - or holiday pay).

But, yes, I still had income tax to pay.

Final bit: I've been back at work, as an employee for nearly 2 years and my health is good - and, I'm still paying taxes - and my employer pays me holiday pay (and today is one of them, because all my colleagues in US a celebrating Thanksgiving, so I'm taking a holiday, too).

Have a great day.

[Paul Waine]

I know there are good reasons for limited companies to exist. However, many of them exist so that unscrupulous business owners can avoid having to pay their debts.

Pretty much the only reason small, one man band limited companies exist is to reduce the tax bill on the shareholder/director.

If it's such an advantage to run as a limited company rather than a sole trader, business owners shouldn't mind paying a bit more tax (I think they'd probably still pay less than an equivalent sole trader, although I haven't checked).

Hi TP, I spent a large part managing credit risks for a range of employers - and my little business also offered advice in this area.

Agree, there are some people who set themselves up as limited companies so that they can spend someone else's money and then walk away. If it's because something went wrong in their business and, not because that was what they always had in mind, then other credit providers (which includes both suppliers and banks that lend to them) may grant them a "second chance." Most of the credit I dealt with was "big corporate stuff" (lots of zeros), occasionally I was asked to deal with smaller businesses. Some were great, they knew they were small and they didn't take on anything were they couldn't meet their obligations. Some were "not great" - and I had to deal with some difficult situations when the credit had already been granted before I got there. It made my work interesting - but, so long as your boss knows that you'd picked up the "hospital pass" that was ok.

[martin_p]

OK, a little more info if you require it:

Everyone pays income tax on all the income you receive. It is all toted up and income tax is charged according to the rules.

The tax system has allowances and different treatments for different types of income.

Personal allowance, £12,500 - until you earn more than £100,000 when the allowance is withdrawn £1 for every £2.

Dividend allowance, currently £2,000 - a couple of years ago £5,000. JC/JMcD plans £nil.

National Insurance: charged on earnings per week/per month or, for directors, per year £8,500 (approx.). Employer pays 13.8%, Employee pays 12.0%.
(When you reach 65 and are still working NIC is not payable).

Pension income also added to your income tax payable.

Remember, I said my business was small. Remember, I also said that I was in hospital and ill for some time - and not earning through this period -(and no one paid me any sick pay - or holiday pay).

But, yes, I still had income tax to pay.

Final bit: I've been back at work, as an employee for nearly 2 years and my health is good - and, I'm still paying taxes - and my employer pays me holiday pay (and today is one of them, because all my colleagues in US a celebrating Thanksgiving, so I'm taking a holiday, too).

Have a great day.

So you didn’t pay yourself an income less than the personal allowance then and take the vast majority of your income through dividends then?

[aggi]

Ringo, that last one is such a silly post. Of course, Brown's prediction about boom and bust turned out to be nothing more than an empty slogan although it did seem reasonable it at the time. But the idea that Labour caused the economic crisis of 2008 is just ridiculous. It hit every country in the world just as hard and there would have been no difference whoever was in power. The real issue was deciding how to respond to it, whether or not the banks should be bailed out, and then how to deal with the hole in public finances. I just wish political debates could be conducted in a reasonable manner. Don't you think that would be a good idea?

Bear in mind that Ringo has the EU down as the main factor in the decline in manufacturing jobs in the UK in the past 40 years. Not automation, the rise in cheap products from the far east, etc. It is just coincidence that countries such as the US have suffered the same decline. When he jumps on a bandwagon he's a true zealot.

[Rick_Muller]

Who's opinion ain't worth twopence and is reduced to using fowl language and personal abuse. To whoever it happens to be aimed at!?

if the cap fits...

Look, please stop using bold and large fonts to try and enforce your warped view on things and I'll apologise. The debate on this thread has been good and I really object to you coming on and tainting the debate in the way that you do, and always appear to do.

[Mala591]

So, in the light of the latest poll predictions, where do Labour go from here?

Corbyn promises to stand down if Labour win the election?
More (unaffordable) financial bribes to the electorate?
Promise of an end to free movement in Labour's Brexit proposals?

Anything else?

[Dy1geo]

Paul Waine - the article on European Health spending is certainly an interesting read. As I said before in my opinion at the next General Election it will certainly be a major if not the defining issue.

The question is how we pay for it does it come from a compulsory payment system similar to pension auto enrolment with money ring fenced or through the General tax system with Govt’s deciding how much of GDP to pay in.

What I can say is that cuts can be made in some areas and whilst it may be unpopular to some and a hard choice we may have to make we could take away higher rate pension tax relief and just give basic rate. I currently get 40% relief for my contributions and 90% of pension tax relief went to higher rate tax payers. The savings cut be redirected to Health care. It currently cost govt. around £40bn a year.

[claretandy]

No mention of brexit, funny that.

[CrosspoolClarets]

I'll run the numbers later if I remember but surely the single mother in your example would be taking money out as a salary with the PA mitigating the corporate tax changes.

The single mother cleaning company would be keeping under the NI threshold so will currently be paying herself just over £8,600 per year, then will be absorbing the £2,000 dividend allowance after the personal allowance, so at a guess she will have to pay dividend tax at 7.5% on about £10,000 which is about £750 plus her corporation tax.

Corbyn is saying she will need to pay an extra £1,250 (I think), the same for her as adding 10% to the basic rate of income tax. I haven’t seen if there are more tax efficient ways to do it if that Labour policy comes in, and I’ve rushed this email while making a brew so it may be incorrect. I have also ignored that she will also pay more in higher corporation tax unless she raises her salary.

[android]

Kate, please don't take the abusive ones seriously. Some people are just unpleasant and that comes out in extreme measure when they are granted the anonymity of a keyboard.

However, I have to say that the Conservative Party DID cause austerity, or at least they made it much worse than it needed to be. As I mentioned before, they could have addressed the problem they faced by a combination of tax rises and cuts to public expenses. It is not impossible to raise taxes, especially at a time like that when they were saying 'We're all in this together.'

They took a conscious decision to go for cuts to public services as the single solution, with all the terrible consequences that this has entailed. They DIDN'T have to do this; they could have struck a balance between cuts and tax rises and the people paying more tax would not have suffered nearly as much as those at the food banks or the elderly folk deprived of proper care. It was a choice they made on behalf of the rich and in my view it was unforgiveable.

Erasmus - is it the cut to the corporation tax rate that bothers you the most? This benefits a wide range of people in a variety of ways including lowering consumer prices. The most obvious benefit is to shareholders whether rich or otherwise (and pension fund beneficiaries are mainly not rich) but I can see why you would consider this a significant boost to the rich. But surely you would concede that it is also a significant factor in the huge increase in employment / reduction in unemployment since 2010?

And don't you think the Tories deserve some credit for increasing the personal tax take from the rich and high earners? The highest earners have paid an average top rate of tax under the Tories (2010 to 2019) of 46%, which compares to 40% under Labour (1997 to 2010). The rates of stamp duty on high value properties have increased massively under the Tories. Tax on landlords (generally wealthier than average you would think) has increased significantly. Whereas, as you know, the personal tax allowance has increased hugely (yes, some credit to Lib Dems!) to the benefit of the lowest earners. Do you not give the Tories any credit at all for these progressive changes?

[dsr]

So you didn’t pay yourself an income less than the personal allowance then and take the vast majority of your income through dividends then?

You do know that if you take income from dividends, it's from money that has already been taxed at Corporation Tax rates? That's why dividends are now, and always have been, subject to some arrangement that reduces the tax rate. It used to be ACT, now it's a lower rate, to avoid double taxation.

What Corbyn is proposing is that the business profits should be taxed at 26% and then taxed again as dividends at full income tax rates. That's why it is seen as such an aggressive tax aimed at business owners.

[CrosspoolClarets]

Why are you paying 12.5% on dividends when the rate is 7.5%?

And if you don't like the increase in corporation tax and dividend tax, you could always unincorporate and pay self-employed income tax on your earnings instead (as could the single mother in your example).

Well spotted, that will teach me for rushing. I was thinking about the 12% NI rate at the time. That would have led to me understating the Corbyn effect.

I could unincorporate, and Corbynites like Martin on here view it as fairer, but it would still be a big tax rise, and thus a big fat lie by Labour.

[CrosspoolClarets]

Hi martin, have you run your own limited company? I hope you weren't adopting that approach to your tax obligations.

My (small) business (before I closed it down), pay myself a salary, pay employer's and employee's NIC (if you are a director of your own business - which of course you are - NIC is annual cumulative), then calculate profit/loss - and pay corporation tax on any profit, then decide if there's any cash that can pay a dividend. Under the previous system, there was £5,000 tax free dividends, then it was reduced (Hammond) to £2,000, now Corbyn/McDonnell want's that reduced to zero - and tax all dividends received at your marginal tax rate. The reason for different tax rates on dividend income and other income is that you received dividends on profits that had already paid corporation tax - hence the governments used to follow the principle that they wouldn't tax the same income twice.

I would add to that (in response to those saying “unincorporate” that limited companies have limited liability on the owners. For some professions they need that protection, going self employed is not an example.

EDIT - sorry Paul, you addressed that yourself in your next post at the top of this page.

This simply hasn’t been thought through, and it will affect hundreds of thousands of good, decent people on the basic rate, and all those they employ (millions) whose hours or entire employment status may need to be cut.

The worry is that when one Labour policy can ruin the countries economy, what happens when we consider the entire manifesto?

[Spijed]

I would add to that (in response to those saying “unincorporate” that limited companies have limited liability on the owners. For some professions they need that protection, going self employed is not an example.

EDIT - sorry Paul, you addressed that yourself in your next post at the top of this page.

This simply hasn’t been thought through, and it will affect hundreds of thousands of good, decent people on the basic rate, and all those they employ (millions) whose hours or entire employment status may need to be cut.

The worry is that when one Labour policy can ruin the countries economy, what happens when we consider the entire manifesto?

The IFS has said both manifestos are not feasible in fairness.

[Tall Paul]

The single mother cleaning company would be keeping under the NI threshold so will currently be paying herself just over £8,600 per year, then will be absorbing the £2,000 dividend allowance after the personal allowance, so at a guess she will have to pay dividend tax at 7.5% on about £10,000 which is about £750 plus her corporation tax.

Corbyn is saying she will need to pay an extra £1,250 (I think), the same for her as adding 10% to the basic rate of income tax. I haven’t seen if there are more tax efficient ways to do it if that Labour policy comes in, and I’ve rushed this email while making a brew so it may be incorrect. I have also ignored that she will also pay more in higher corporation tax unless she raises her salary.

She also probably puts about 90% of her private fuel and 100% of her household cleaning products (as well as any other personal expenses she thinks she can away with) through her limited company and gets corporation tax relief on those expenses on top of reducing the dividend she pays the lower rate of tax on.

[CrosspoolClarets]

I know there are good reasons for limited companies to exist. However, many of them exist so that unscrupulous business owners can avoid having to pay their debts.

Pretty much the only reason small, one man band limited companies exist is to reduce the tax bill on the shareholder/director.

If it's such an advantage to run as a limited company rather than a sole trader, business owners shouldn't mind paying a bit more tax (I think they'd probably still pay less than an equivalent sole trader, although I haven't checked).

I would agree with that apart from the hyperbole (there are many reasons, not just tax bill reduction, liability being the biggest, especially if you employ staff and something happens to them, to a client, or a third party).

But yes, I get annoyed with people like the IT contractor who is actually doing disguised employment and is there for a year or more. My work is pure consultancy, short term ad hoc clients, several at once, with lots of unpaid time in between. But the answer is to tighten up IR35 (largely done) not to throw the baby out with the bathwater and punish ALL micro business owners of all types.

[CrosspoolClarets]

The IFS has said both manifestos are not feasible in fairness.

That’s like saying that both Burnley and Bacup are not good enough for Champions League football.

The Tory one is break even (ish) apart from infrastructure spending. It is more or less what would have been in Javid’s normal budget.

[Tall Paul]

I would agree with that apart from the hyperbole (there are many reasons, not just tax bill reduction, liability being the biggest, especially if you employ staff and something happens to them, to a client, or a third party).

That's why I said small, one man band limited companies who, by definition, don't employ any staff. None of these were limited companies up until around 15 years ago when it became more tax efficient for them to incorporate.

[CrosspoolClarets]

She also probably puts about 90% of her private fuel and 100% of her household cleaning products (as well as any other personal expenses she thinks she can away with) through her limited company and gets corporation tax relief on those expenses on top of reducing the dividend she pays the lower rate of tax on.

Does she heck.

She isn’t that clever. If I daren’t put private fuel through my business no way will she. She will be cautious and follow the advice of her accountant who she will pay a few hundred quid to.

Just because some break the law doesn’t mean everyone is at it. You’re far too clever to sound as conspiratorial as Corbyn.

[Paul Waine]

So you didn’t pay yourself an income less than the personal allowance then and take the vast majority of your income through dividends then?

Many reasons why I wouldn't do that:

1) Potential clients would want to know that whoever they work with is running a proper business. My contracts included the requirement to have professional indemnity insurance - in case I gave client incorrect advice - and 3rd party liability insurance - in case there was an accident when I was on client premises and client thought I was at fault (imagine if I spilt a cup of coffee and it blew their electrics and office couldn't work for the day etc etc).

Imagine also if you got a paint in to paint your window frames on upper floor - and then s/he fell off their ladder - they might claim against you, if they don't have their own insurance...

2) I've got an accounting qualification - and I want to keep it - even though I don't do work as an accountant. If my business is providing consulting services, then someone is doing that work - and the accounts should show that they are being paid for their work - so, you do it properly and pay yourself a wage - and deduct tax from the employee's wage (yourself) and pay employer's NIC and deduct employee's NIC - all according to the limits.

Finally, you take out dividends after you've paid corporation tax that is due.

HMRC likes dealing with people who stick with the rules - and can come down tough on those that don't. Why would anyone want to end up there? In my case, I can hardly argue that "I didn't know" or "I left it all to my accountant...."

[Dy1geo]

She also probably puts about 90% of her private fuel and 100% of her household cleaning products (as well as any other personal expenses she thinks she can away with) through her limited company and gets corporation tax relief on those expenses on top of reducing the dividend she pays the lower rate of tax on.

Putting personal fuel and her own household cleaning products through is illegal and a tax officer would pull her up on it.

[Paul Waine]

Paul Waine - the article on European Health spending is certainly an interesting read. As I said before in my opinion at the next General Election it will certainly be a major if not the defining issue.

The question is how we pay for it does it come from a compulsory payment system similar to pension auto enrolment with money ring fenced or through the General tax system with Govt’s deciding how much of GDP to pay in.

What I can say is that cuts can be made in some areas and whilst it may be unpopular to some and a hard choice we may have to make we could take away higher rate pension tax relief and just give basic rate. I currently get 40% relief for my contributions and 90% of pension tax relief went to higher rate tax payers. The savings cut be redirected to Health care. It currently cost govt. around £40bn a year.

From my experience in Netherlands - and my experience in UK - I'd go with compulsory insurance arrangements following the way that the EU supports - and which ensures all people have insurance (those who can't afford or who have pre-existing conditions are covered by everyone else). I think it's a big reason why expenditure is higher in other EU countries - because each of us knows we have our own health insurance - and, if we need health care, some small/modest contribution is easy for us to do (I mean "easy" in the sense that, if I need to see GP or visit hospital I know that what I'm paying is going towards my own needs). And, from the health care providers side, they get their money when you need treatment. So, more is spent - and less is wasted by a big gov't/health dept in the middle deciding what their priorities are/guessing what health needs will arise/allocating funding based on last year's budget etc etc.

So, adopt Netherlands health care arrangements and we sill increase spending on our health care - and, it will lessen the political "bun fighting" which always wastes so much.

Dare to dream.

[Tall Paul]

Putting personal fuel and her own household cleaning products through is illegal and a tax officer would pull her up on it.

Of course it is, but only if she gets caught and most of them never do because it isn't worth HMRC's time to chase after the small fish.

You have to be pretty naive to believe that the vast majority of small business owners don't put through as many personal expenses that they can get away with. You'll be telling me next that cash-based businesses don't underdeclare their takings.

[Rick_Muller]

Of course it is, but only if she gets caught and most of them never do because it isn't worth HMRC's time to chase after the small fish.

You have to be pretty naive to believe that the vast majority of small business owners don't put through as many personal expenses that they can get away with. You'll be telling me next that cash-based businesses don't underdeclare their takings.

Every and I mean EVERY small business that I have had dealings with in the last few years (plumbers; electricians; builders etc) have always wanted me to pay in cash for a discount (and assumed that I would want it!). I have always insisted on card or bank transfer for my records.

[Paul Waine]

But yes, I get annoyed with people like the IT contractor who is actually doing disguised employment and is there for a year or more. My work is pure consultancy, short term ad hoc clients, several at once, with lots of unpaid time in between. But the answer is to tighten up IR35 (largely done) not to throw the baby out with the bathwater and punish ALL micro business owners of all types.

For the record - I'm sure some on here are interested:

When I returned to employment it started out as a situation where I could have asked to be paid as a consultant - after all that was what I'd been doing before my ex-employer asked if I could "help them out...." But, I knew the tax rules - and said it would be better for both me and them if I was an employee on the payroll - don't let the IR35 rules complicate things etc etc.

I've been back there coming up to 2 years. No way would that have been the case if I'd said I wanted to be paid as a contractor.

[Spijed]

Crosspool, what is your view on Boris refusing to take part in the Andrew Neil interview?

It's worrying that the BBC no longer looks impartial.

[Paul Waine]

Of course it is, but only if she gets caught and most of them never do because it isn't worth HMRC's time to chase after the small fish.

You have to be pretty naive to believe that the vast majority of small business owners don't put through as many personal expenses that they can get away with. You'll be telling me next that cash-based businesses don't underdeclare their takings.

I can agree with that - but, who goes into business planning that they will only ever be a small business?

[Rick_Muller]

I can agree with that - but, who goes into business planning that they will only ever be a small business?

most tradesmen - whilst they probably have dreams of expansion, the thought of employing others likely scares them. Of course there's always the " & son" scenario but that's different.

[claretandy]

Crosspool, what is your view on Boris refusing to take part in the Andrew Neil interview?

It's worrying that the BBC no longer looks impartial.

He hasn't refused, they are still trying to sort out a date.

[Spijed]

He hasn't refused, they are still trying to sort out a date.

And I'll bet that date will never get agreed to.

[martin_p]

You do know that if you take income from dividends, it's from money that has already been taxed at Corporation Tax rates? That's why dividends are now, and always have been, subject to some arrangement that reduces the tax rate. It used to be ACT, now it's a lower rate, to avoid double taxation.

What Corbyn is proposing is that the business profits should be taxed at 26% and then taxed again as dividends at full income tax rates. That's why it is seen as such an aggressive tax aimed at business owners.

Yes, I also know that dividends don't attract any National Insurance Contributions. I know exactly how it works and exactly why most people working for themselves set up limited companies.

[claretandy]

And I'll bet that date will never get agreed to.

It's not a good look if he ducks it.

[bfcjg]

Re the NHS if American companies after Brexit can supply drugs cheaper then European companies it would be a no brainer not to allow American businesses access to the NHS, what planet are the left on ?

[martin_p]

Many reasons why I wouldn't do that:

1) Potential clients would want to know that whoever they work with is running a proper business. My contracts included the requirement to have professional indemnity insurance - in case I gave client incorrect advice - and 3rd party liability insurance - in case there was an accident when I was on client premises and client thought I was at fault (imagine if I spilt a cup of coffee and it blew their electrics and office couldn't work for the day etc etc).

Imagine also if you got a paint in to paint your window frames on upper floor - and then s/he fell off their ladder - they might claim against you, if they don't have their own insurance...

2) I've got an accounting qualification - and I want to keep it - even though I don't do work as an accountant. If my business is providing consulting services, then someone is doing that work - and the accounts should show that they are being paid for their work - so, you do it properly and pay yourself a wage - and deduct tax from the employee's wage (yourself) and pay employer's NIC and deduct employee's NIC - all according to the limits.

Finally, you take out dividends after you've paid corporation tax that is due.

HMRC likes dealing with people who stick with the rules - and can come down tough on those that don't. Why would anyone want to end up there? In my case, I can hardly argue that "I didn't know" or "I left it all to my accountant...."

It's not against the rules as long as you're paying yourself at least minimum wage, attracting no income tax.

[Mala591]

Hang on a minute! Are the Labour party LYING when they say that NO ONE who earns less than £80,000 per year will pay any more income tax?