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Self Employed
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"From what I understand it would be 80% of salary, if you are a director of the company if your profit last year was over 50k it's nothing which is fair enough, all very complex though" all very complex, I don’t think I qualify | |||
"Dividends don’t qualify " I thought that. Awww well. What actually do I pay cooperation tax for? | |||
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"It has nothing to do with dividends. If your self employed and pay yourself with dividends you are covered if your trading profit is below 50k annually " If you are a Ltd company and a director you will be employed by the company which technically makes you employed and you have a salary, being a director allows you to draw dividends. | |||
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"From what I understand it would be 80% of salary, if you are a director of the company if your profit last year was over 50k it's nothing which is fair enough, all very complex though all very complex, I don’t think I qualify " The best article on this is on the Construction Enquirer website. According to their experts 95% of self employed will be eligible. | |||
"It has nothing to do with dividends. If your self employed and pay yourself with dividends you are covered if your trading profit is below 50k annually " Yeah, that’s true having reread the emails. The 50k is the crucial thing and having been in self employment trading 2019-20. Plus having put in a self assessment return for last years trading already although I did hear you still have 4 weeks to get it in if you haven’t already to qualify. | |||
"It has nothing to do with dividends. If your self employed and pay yourself with dividends you are covered if your trading profit is below 50k annually If you are a Ltd company and a director you will be employed by the company which technically makes you employed and you have a salary, being a director allows you to draw dividends. " I am a Ltd company and a director. I pay myself via divends is that classed as a wage | |||
"It has nothing to do with dividends. If your self employed and pay yourself with dividends you are covered if your trading profit is below 50k annually If you are a Ltd company and a director you will be employed by the company which technically makes you employed and you have a salary, being a director allows you to draw dividends. I am a Ltd company and a director. I pay myself via divends is that classed as a wage " As a director of a limited company you are technically an employee. If you took a wage of any kind, be it hourly paid or a fixed annual salary you would be covered. But as you only take a wage via a dividend then you are not covered. The 50k limit is on the declared profit of a self employed person so of no relevance in your case. I am afraid you thought you were doing the right thing taking only a dividend but in this situation you wont be able to claim . | |||
"It has nothing to do with dividends. If your self employed and pay yourself with dividends you are covered if your trading profit is below 50k annually If you are a Ltd company and a director you will be employed by the company which technically makes you employed and you have a salary, being a director allows you to draw dividends. I am a Ltd company and a director. I pay myself via divends is that classed as a wage " If it was classed as a wage you'd be paying proper income tax on it! | |||
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"How much do you pay yourself salary? Minimum?" No they said they don't take a wage, only pay themselves a dividend and dividends are not covered under the scheme. Lots will lose out because of that but no scheme they can come up with that quickly can cover all situations. | |||
"It has nothing to do with dividends. If your self employed and pay yourself with dividends you are covered if your trading profit is below 50k annually " No you’re excluded as an employee, there’s another scene for job retention for employees , if you only receive dividend your neither an employee or self employed you’re just a shareholder | |||
"It taking a dividend some kind of way of dodging tax etc ? I don't really understand it." No it’s a legal way to reduce not dodge tax, but it’s a really bad idea | |||
"It has nothing to do with dividends. If your self employed and pay yourself with dividends you are covered if your trading profit is below 50k annually If you are a Ltd company and a director you will be employed by the company which technically makes you employed and you have a salary, being a director allows you to draw dividends. I am a Ltd company and a director. I pay myself via divends is that classed as a wage " Copied from BBC website “Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will have 80% of their salary covered by the Coronavirus Job Retention Scheme if operating through PAYE.” Your dividends won’t be included. | |||
"It taking a dividend some kind of way of dodging tax etc ? I don't really understand it. No it’s a legal way to reduce not dodge tax, but it’s a really bad idea " You used to save on tax but the change in laws doesn't make it as beneficial as it used to be as you also pay personal tax @ 7% in any dividends after the 1st £3000 | |||
"It has nothing to do with dividends. If your self employed and pay yourself with dividends you are covered if your trading profit is below 50k annually If you are a Ltd company and a director you will be employed by the company which technically makes you employed and you have a salary, being a director allows you to draw dividends. I am a Ltd company and a director. I pay myself via divends is that classed as a wage " Sadly no. If you draw a salary then you are an employee so you apply through the furlough scheme(as a company) to pay your employee (you) 80% of your average salary. | |||
"It has nothing to do with dividends. If your self employed and pay yourself with dividends you are covered if your trading profit is below 50k annually If you are a Ltd company and a director you will be employed by the company which technically makes you employed and you have a salary, being a director allows you to draw dividends. I am a Ltd company and a director. I pay myself via divends is that classed as a wage Sadly no. If you draw a salary then you are an employee so you apply through the furlough scheme(as a company) to pay your employee (you) 80% of your average salary." and the chances are your PAYE "salary" will be the lowest basic level to maximise tax efficiency? | |||
"It has nothing to do with dividends. If your self employed and pay yourself with dividends you are covered if your trading profit is below 50k annually If you are a Ltd company and a director you will be employed by the company which technically makes you employed and you have a salary, being a director allows you to draw dividends. I am a Ltd company and a director. I pay myself via divends is that classed as a wage Sadly no. If you draw a salary then you are an employee so you apply through the furlough scheme(as a company) to pay your employee (you) 80% of your average salary. and the chances are your PAYE "salary" will be the lowest basic level to maximise tax efficiency? " How did you guess! | |||
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"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? " It all depends on how much you get paid in dividends, but weather it’s paid as a wage or as dividends it’s all classed as profit as earnings | |||
"If you're company had made over 50k profit you shouldn't need any help" You probably need a better accountant | |||
"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? It all depends on how much you get paid in dividends, but weather it’s paid as a wage or as dividends it’s all classed as profit as earnings " Not so, dividends are not included, see several of the above posts. | |||
"If you're company had made over 50k profit you shouldn't need any help You probably need a better accountant" I'm quoting this on principles! | |||
"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? " You are the 5% that gets no help! | |||
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"Being a small ltd company sucks big time. You will get help on the 12.5k that your probably down as earning but not on the dividend that you withdraw to top up your wages. Unless your dividend is more than 50k as I believe it’s classed as profit. That’s as I understand it anyway having once owned a ltd company " mine is a small ltd company. I don’t pay myself a wage but my accountant did advise this. I’m only back to self employment in September it was the plan to get all this sorted but I just never got around to it. I’m a one man band. I’m the product I.e I’m a free lance construction professional. And you know what really sucks I’m a front line worker. I’m working in a hospital on the maintenance contract getting areas in place for covid 19 | |||
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"It's been hinted that taxes for self employed may have to increase in order to pay for this help. The govt is expecting this money back. https://www.dailymail.co.uk/news/article-8162323/Ex-Cabinet-minister-David-Davis-slams-Chancellor-Rishi-Sunaks-tax-raid-self-employed.html" Yep | |||
"I feel you mate, it’s a shame because you can use your dividend income as proof of earnings on a mortgage application so I don’t know what they don’t take it into consideration during this pandemic. Good luck. " thanks! | |||
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"Just watched this Martin Lewis video on this subject. I think you maybe ok as he was saying they will take dividends into account if I heard it correctly. " Not according to his website. “If you're a company director and pay yourself a salary or dividends you won't be covered by this scheme, but you could get support through the Coronavirus Job Retention Scheme for employees if you operate pay-as-you-earn schemes.” Ie 80% of salary. | |||
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"Clever accountants since the year dot have encouraged ways of minimising profit and hence tax. They exploit loopholes to minimise income and Profit. I know it can be done from experience. I know how it's done and can see the huge problem. Luckily I chose to become an employee back in 2007 and boy oh boy am I glad I did now. Ok I have had years and years of no pay rise etc due to crap economy but at least now I have a £ 7.5 K backstop if my workload goes over the cliff. My point is you can't have it both ways, minimising income and tax and then expect it to be as plain sailing as PAYE to sort out these grants. " I totally respect your post and only partially disagree. I have worked my whole life for 20 years and 3 of those has been self employed. Whilst self employed i paid my vat bill and corporation tax. I paid my tax up to date all the time. The issue arises on how I pay myself via my limited company. I pay myself on dividends they pay the tax on the dividends. But I’m exempt from help because I chose to pay myself in this method. How is this fair? I’m tax compliant and pay my way all the time. | |||
"Clever accountants since the year dot have encouraged ways of minimising profit and hence tax. They exploit loopholes to minimise income and Profit. I know it can be done from experience. I know how it's done and can see the huge problem. Luckily I chose to become an employee back in 2007 and boy oh boy am I glad I did now. Ok I have had years and years of no pay rise etc due to crap economy but at least now I have a £ 7.5 K backstop if my workload goes over the cliff. My point is you can't have it both ways, minimising income and tax and then expect it to be as plain sailing as PAYE to sort out these grants. I totally respect your post and only partially disagree. I have worked my whole life for 20 years and 3 of those has been self employed. Whilst self employed i paid my vat bill and corporation tax. I paid my tax up to date all the time. The issue arises on how I pay myself via my limited company. I pay myself on dividends they pay the tax on the dividends. But I’m exempt from help because I chose to pay myself in this method. How is this fair? I’m tax compliant and pay my way all the time. " Corporation tax/tax on dividends are lower than income tax. Also avoids national insurance. This is why accontants advise many "directors" to do this. Its legal but means you pay less into the system. Hence you will get less out...its NI that pays benefuts etc. (In theory). If you pay VAT then I assume you are over the 83k threshold for that...so may be doubly ineligible. May seem harsh...but there you are! | |||
"Clever accountants since the year dot have encouraged ways of minimising profit and hence tax. They exploit loopholes to minimise income and Profit. I know it can be done from experience. I know how it's done and can see the huge problem. Luckily I chose to become an employee back in 2007 and boy oh boy am I glad I did now. Ok I have had years and years of no pay rise etc due to crap economy but at least now I have a £ 7.5 K backstop if my workload goes over the cliff. My point is you can't have it both ways, minimising income and tax and then expect it to be as plain sailing as PAYE to sort out these grants. I totally respect your post and only partially disagree. I have worked my whole life for 20 years and 3 of those has been self employed. Whilst self employed i paid my vat bill and corporation tax. I paid my tax up to date all the time. The issue arises on how I pay myself via my limited company. I pay myself on dividends they pay the tax on the dividends. But I’m exempt from help because I chose to pay myself in this method. How is this fair? I’m tax compliant and pay my way all the time. Corporation tax/tax on dividends are lower than income tax. Also avoids national insurance. This is why accontants advise many "directors" to do this. Its legal but means you pay less into the system. Hence you will get less out...its NI that pays benefuts etc. (In theory). If you pay VAT then I assume you are over the 83k threshold for that...so may be doubly ineligible. May seem harsh...but there you are!" I totally get that. But what I don’t get it what exactly does my corporation tax cover mr for? | |||
"Clever accountants since the year dot have encouraged ways of minimising profit and hence tax. They exploit loopholes to minimise income and Profit. I know it can be done from experience. I know how it's done and can see the huge problem. Luckily I chose to become an employee back in 2007 and boy oh boy am I glad I did now. Ok I have had years and years of no pay rise etc due to crap economy but at least now I have a £ 7.5 K backstop if my workload goes over the cliff. My point is you can't have it both ways, minimising income and tax and then expect it to be as plain sailing as PAYE to sort out these grants. I totally respect your post and only partially disagree. I have worked my whole life for 20 years and 3 of those has been self employed. Whilst self employed i paid my vat bill and corporation tax. I paid my tax up to date all the time. The issue arises on how I pay myself via my limited company. I pay myself on dividends they pay the tax on the dividends. But I’m exempt from help because I chose to pay myself in this method. How is this fair? I’m tax compliant and pay my way all the time. Corporation tax/tax on dividends are lower than income tax. Also avoids national insurance. This is why accontants advise many "directors" to do this. Its legal but means you pay less into the system. Hence you will get less out...its NI that pays benefuts etc. (In theory). If you pay VAT then I assume you are over the 83k threshold for that...so may be doubly ineligible. May seem harsh...but there you are! I totally get that. But what I don’t get it what exactly does my corporation tax cover mr for? " CT is the tax on the Ltd company profits. Nothing to do with you personally. | |||
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"It's at times like these that we appreciate the benefits of everyone paying taxes as well as larger corporations not switching money around the globe to places like the Cayman Isles. Only our taxes fund the essentials of a decent society, such as good healthcare, that can be resilient to global pandemics etc. " I take it then that the directors of Thomas Cook will be returning all the money they took as bonuses just before they went belly up? Do you think Sainsbury's will be paying their VAT despite the fact they have made a fortune out of panic buying? | |||
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"It's at times like these that we appreciate the benefits of everyone paying taxes as well as larger corporations not switching money around the globe to places like the Cayman Isles. Only our taxes fund the essentials of a decent society, such as good healthcare, that can be resilient to global pandemics etc. " Sorry my last post doesn't convey my support for what you posted. I'm actually 100% behind you. There is so much money in the Square Mile that if that money was distributed equally amongst the people in the UK no citizen would need to work again. So yes. How about we audit anonymous bank accounts? Confiscate the proceeds of illicit dealings, the money from cartels, human traffickers, corrupt foreign politicians etc. | |||
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"https://www.ipse.co.uk/ipse-news/ipse-blog/ltd-co-contractors-covid-support-selfemployed.html "While sole traders can look forward to a potentially substantial grant in around two months’ time, Ltd Co directors will get no such benefit. Instead, the options available to you look thin at the moment – the Coronavirus Business Interruption Loans, the ability to defer or delay some tax payments, possible recourse to Universal Credit, and the ability to effectively ‘furlough’ yourself in order to access 80% of your PAYE earnings through the COVID Job Retention Scheme (we’ve had it on very, very good authority that you can do this, though there is some doubt circulating, and we are seeking clarification)." Do you remember the chancellor saying on TV that he stood behind each and everyone of us? Well that's just a lie." I knew from day 1 I’d get no support. I understand the risks of self employment. But I pay my taxes. I don’t tax dodge in the Cayman Islands etc I pay mine. I’ve applied for universal credit today so I’ll await the outcome of that. I’ve no doubt I’ll not get it | |||
"https://www.ipse.co.uk/ipse-news/ipse-blog/ltd-co-contractors-covid-support-selfemployed.html "While sole traders can look forward to a potentially substantial grant in around two months’ time, Ltd Co directors will get no such benefit. Instead, the options available to you look thin at the moment – the Coronavirus Business Interruption Loans, the ability to defer or delay some tax payments, possible recourse to Universal Credit, and the ability to effectively ‘furlough’ yourself in order to access 80% of your PAYE earnings through the COVID Job Retention Scheme (we’ve had it on very, very good authority that you can do this, though there is some doubt circulating, and we are seeking clarification)." Do you remember the chancellor saying on TV that he stood behind each and everyone of us? Well that's just a lie. I knew from day 1 I’d get no support. I understand the risks of self employment. But I pay my taxes. I don’t tax dodge in the Cayman Islands etc I pay mine. I’ve applied for universal credit today so I’ll await the outcome of that. I’ve no doubt I’ll not get it " The thing is you have received a significant tax reduction by paying yourself in dividends rather than a salary that’s subject to PAYE but unfortunately that’s come back to bite you. You claim that you pay all your taxes but VAT has nothing to do with you, you are just the tax collector and Corporation Tax is the tax on your profits, just as employees pay PAYE upon their taxable salaries. I suspect that once this is all over, the tax benefit of paying dividends over salary will be nullified. | |||
"https://www.ipse.co.uk/ipse-news/ipse-blog/ltd-co-contractors-covid-support-selfemployed.html "While sole traders can look forward to a potentially substantial grant in around two months’ time, Ltd Co directors will get no such benefit. Instead, the options available to you look thin at the moment – the Coronavirus Business Interruption Loans, the ability to defer or delay some tax payments, possible recourse to Universal Credit, and the ability to effectively ‘furlough’ yourself in order to access 80% of your PAYE earnings through the COVID Job Retention Scheme (we’ve had it on very, very good authority that you can do this, though there is some doubt circulating, and we are seeking clarification)." Do you remember the chancellor saying on TV that he stood behind each and everyone of us? Well that's just a lie. I knew from day 1 I’d get no support. I understand the risks of self employment. But I pay my taxes. I don’t tax dodge in the Cayman Islands etc I pay mine. I’ve applied for universal credit today so I’ll await the outcome of that. I’ve no doubt I’ll not get it The thing is you have received a significant tax reduction by paying yourself in dividends rather than a salary that’s subject to PAYE but unfortunately that’s come back to bite you. You claim that you pay all your taxes but VAT has nothing to do with you, you are just the tax collector and Corporation Tax is the tax on your profits, just as employees pay PAYE upon their taxable salaries. I suspect that once this is all over, the tax benefit of paying dividends over salary will be nullified." There is misconception that LLC directors pay less tax. The fact is that LLC diectors now pay tax on dividends. If you look at those you will see that the tax brackets hammer the average income earner whilst being very lenient on the megga income earners. There is a higher percentage jump from low to middle than there is from low to high. Whilst the HMRC has been demonising contractors saying 90% of them operate outside of the law. However when challenged to provide proof of this claim HMRC were unable to do so. Please do not subscribe to the HMRC propoganda machine. Contracting is a perfectly legal and honest profession. A flexible workforce is a vital part of our economy. Yes contractors get paid more. But they take more risks, get no sick leave or holiday pay or income when there is no work. To kill the entrepreneurial spirit and make us all workers is to keep people with ambition from realizing their true potential. Why don't people conentrate on the true villains. The giant corporations who don't pay their fair share in taxes? | |||
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"Sole trader here self employed self assessed for over five years under 50k businesses potentially ruined beyond repair we can but hope and diversify will be contacted by hmrc as per gov. Co. UK and a payment made around June of 80% average turnover based on last three years tax returns, as a business in event management and event merchandise everything has been cancelled, we are trying to diversify, and pray events can recommence as soon as is allowed, but I've cancelled anything I don't need, Im lucky to have a earning partner, but my outgoings are not his, and we're based in my income, so tight belts buckle down until June, rely on people supporting us in diversifying and hope hmrc pay us something to pay off the debts I'm going to have to accrue in the meantime, but we are alive, we are thinking positive" My thoughts are with you and all those like you. My fingers are crossed that you will hang in there and that business is better than ever coming out the other side. We will need everyone, not just big businesses to build this economy back. Good luck guys! | |||
"https://www.ipse.co.uk/ipse-news/ipse-blog/ltd-co-contractors-covid-support-selfemployed.html "While sole traders can look forward to a potentially substantial grant in around two months’ time, Ltd Co directors will get no such benefit. Instead, the options available to you look thin at the moment – the Coronavirus Business Interruption Loans, the ability to defer or delay some tax payments, possible recourse to Universal Credit, and the ability to effectively ‘furlough’ yourself in order to access 80% of your PAYE earnings through the COVID Job Retention Scheme (we’ve had it on very, very good authority that you can do this, though there is some doubt circulating, and we are seeking clarification)." Do you remember the chancellor saying on TV that he stood behind each and everyone of us? Well that's just a lie. I knew from day 1 I’d get no support. I understand the risks of self employment. But I pay my taxes. I don’t tax dodge in the Cayman Islands etc I pay mine. I’ve applied for universal credit today so I’ll await the outcome of that. I’ve no doubt I’ll not get it The thing is you have received a significant tax reduction by paying yourself in dividends rather than a salary that’s subject to PAYE but unfortunately that’s come back to bite you. You claim that you pay all your taxes but VAT has nothing to do with you, you are just the tax collector and Corporation Tax is the tax on your profits, just as employees pay PAYE upon their taxable salaries. I suspect that once this is all over, the tax benefit of paying dividends over salary will be nullified. There is misconception that LLC directors pay less tax. The fact is that LLC diectors now pay tax on dividends. If you look at those you will see that the tax brackets hammer the average income earner whilst being very lenient on the megga income earners. There is a higher percentage jump from low to middle than there is from low to high. Whilst the HMRC has been demonising contractors saying 90% of them operate outside of the law. However when challenged to provide proof of this claim HMRC were unable to do so. Please do not subscribe to the HMRC propoganda machine. Contracting is a perfectly legal and honest profession. A flexible workforce is a vital part of our economy. Yes contractors get paid more. But they take more risks, get no sick leave or holiday pay or income when there is no work. To kill the entrepreneurial spirit and make us all workers is to keep people with ambition from realizing their true potential. Why don't people conentrate on the true villains. The giant corporations who don't pay their fair share in taxes?" There’s no misconception in my post. A sole director of a company that receives his/her remuneration by a mix of salary and dividends will pay less income tax and NIC than if they were paid the same amount purely as salary? That’s the whole point of the exercise. I don’t believe I mentioned contractors! | |||
"It taking a dividend some kind of way of dodging tax etc ? I don't really understand it. No it’s a legal way to reduce not dodge tax, but it’s a really bad idea You used to save on tax but the change in laws doesn't make it as beneficial as it used to be as you also pay personal tax @ 7% in any dividends after the 1st £3000" Only up to the normal higher and additional earning bands, and then it’s 32.5% and 38.1% respectively. | |||
"Sole trader here self employed self assessed for over five years under 50k businesses potentially ruined beyond repair we can but hope and diversify will be contacted by hmrc as per gov. Co. UK and a payment made around June of 80% average turnover based on last three years tax returns, as a business in event management and event merchandise everything has been cancelled, we are trying to diversify, and pray events can recommence as soon as is allowed, but I've cancelled anything I don't need, Im lucky to have a earning partner, but my outgoings are not his, and we're based in my income, so tight belts buckle down until June, rely on people supporting us in diversifying and hope hmrc pay us something to pay off the debts I'm going to have to accrue in the meantime, but we are alive, we are thinking positive" The taxable grant can be worth up to 80% of your PROFITS not your turnover, to a maximum of £2500 per month. You are also able to defer any tax that you were due to pay in July until next January so you could utilise that until your payment comes through in July. | |||
"It taking a dividend some kind of way of dodging tax etc ? I don't really understand it. No it’s a legal way to reduce not dodge tax, but it’s a really bad idea You used to save on tax but the change in laws doesn't make it as beneficial as it used to be as you also pay personal tax @ 7% in any dividends after the 1st £3000 Only up to the normal higher and additional earning bands, and then it’s 32.5% and 38.1% respectively." This is exactly my point. There is a huge jump from the lower band to the mid band and the snallest jump of all to the highest band. There are no more increments after that. It's a tax aimed at small businesses. | |||
"https://www.ipse.co.uk/ipse-news/ipse-blog/ltd-co-contractors-covid-support-selfemployed.html "While sole traders can look forward to a potentially substantial grant in around two months’ time, Ltd Co directors will get no such benefit. Instead, the options available to you look thin at the moment – the Coronavirus Business Interruption Loans, the ability to defer or delay some tax payments, possible recourse to Universal Credit, and the ability to effectively ‘furlough’ yourself in order to access 80% of your PAYE earnings through the COVID Job Retention Scheme (we’ve had it on very, very good authority that you can do this, though there is some doubt circulating, and we are seeking clarification)." Do you remember the chancellor saying on TV that he stood behind each and everyone of us? Well that's just a lie. I knew from day 1 I’d get no support. I understand the risks of self employment. But I pay my taxes. I don’t tax dodge in the Cayman Islands etc I pay mine. I’ve applied for universal credit today so I’ll await the outcome of that. I’ve no doubt I’ll not get it The thing is you have received a significant tax reduction by paying yourself in dividends rather than a salary that’s subject to PAYE but unfortunately that’s come back to bite you. You claim that you pay all your taxes but VAT has nothing to do with you, you are just the tax collector and Corporation Tax is the tax on your profits, just as employees pay PAYE upon their taxable salaries. I suspect that once this is all over, the tax benefit of paying dividends over salary will be nullified. There is misconception that LLC directors pay less tax. The fact is that LLC diectors now pay tax on dividends. If you look at those you will see that the tax brackets hammer the average income earner whilst being very lenient on the megga income earners. There is a higher percentage jump from low to middle than there is from low to high. Whilst the HMRC has been demonising contractors saying 90% of them operate outside of the law. However when challenged to provide proof of this claim HMRC were unable to do so. Please do not subscribe to the HMRC propoganda machine. Contracting is a perfectly legal and honest profession. A flexible workforce is a vital part of our economy. Yes contractors get paid more. But they take more risks, get no sick leave or holiday pay or income when there is no work. To kill the entrepreneurial spirit and make us all workers is to keep people with ambition from realizing their true potential. Why don't people conentrate on the true villains. The giant corporations who don't pay their fair share in taxes? There’s no misconception in my post. A sole director of a company that receives his/her remuneration by a mix of salary and dividends will pay less income tax and NIC than if they were paid the same amount purely as salary? That’s the whole point of the exercise. I don’t believe I mentioned contractors!" The misconception, a common misconception not your misconception, is that direcors pay themselves dividends and hence less tax. The truth is that the money they earn is taxed 3 times over. Once as a profit (Corporation Tax), twice when it is issued as a dividend, and again as VAT when it is spent. On the other hand people who earn money as a salary have that money taxed twice because when their company pays them it is an expense. The company they work for pays less tax because of their salaries. | |||
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"https://www.ipse.co.uk/ipse-news/ipse-blog/ltd-co-contractors-covid-support-selfemployed.html "While sole traders can look forward to a potentially substantial grant in around two months’ time, Ltd Co directors will get no such benefit. Instead, the options available to you look thin at the moment – the Coronavirus Business Interruption Loans, the ability to defer or delay some tax payments, possible recourse to Universal Credit, and the ability to effectively ‘furlough’ yourself in order to access 80% of your PAYE earnings through the COVID Job Retention Scheme (we’ve had it on very, very good authority that you can do this, though there is some doubt circulating, and we are seeking clarification)." Do you remember the chancellor saying on TV that he stood behind each and everyone of us? Well that's just a lie. I knew from day 1 I’d get no support. I understand the risks of self employment. But I pay my taxes. I don’t tax dodge in the Cayman Islands etc I pay mine. I’ve applied for universal credit today so I’ll await the outcome of that. I’ve no doubt I’ll not get it The thing is you have received a significant tax reduction by paying yourself in dividends rather than a salary that’s subject to PAYE but unfortunately that’s come back to bite you. You claim that you pay all your taxes but VAT has nothing to do with you, you are just the tax collector and Corporation Tax is the tax on your profits, just as employees pay PAYE upon their taxable salaries. I suspect that once this is all over, the tax benefit of paying dividends over salary will be nullified. There is misconception that LLC directors pay less tax. The fact is that LLC diectors now pay tax on dividends. If you look at those you will see that the tax brackets hammer the average income earner whilst being very lenient on the megga income earners. There is a higher percentage jump from low to middle than there is from low to high. Whilst the HMRC has been demonising contractors saying 90% of them operate outside of the law. However when challenged to provide proof of this claim HMRC were unable to do so. Please do not subscribe to the HMRC propoganda machine. Contracting is a perfectly legal and honest profession. A flexible workforce is a vital part of our economy. Yes contractors get paid more. But they take more risks, get no sick leave or holiday pay or income when there is no work. To kill the entrepreneurial spirit and make us all workers is to keep people with ambition from realizing their true potential. Why don't people conentrate on the true villains. The giant corporations who don't pay their fair share in taxes? There’s no misconception in my post. A sole director of a company that receives his/her remuneration by a mix of salary and dividends will pay less income tax and NIC than if they were paid the same amount purely as salary? That’s the whole point of the exercise. I don’t believe I mentioned contractors! The misconception, a common misconception not your misconception, is that direcors pay themselves dividends and hence less tax. The truth is that the money they earn is taxed 3 times over. Once as a profit (Corporation Tax), twice when it is issued as a dividend, and again as VAT when it is spent. On the other hand people who earn money as a salary have that money taxed twice because when their company pays them it is an expense. The company they work for pays less tax because of their salaries. " That’s nonsense. The Company pays Corporation Tax, not the Director. The Director could, if he wished, take all the profits as salary and then there would be no Corporation Tax payable, only the PAYE on salary. The Directors salary is also an expense against the company’s profits and therefore reduces its tax bill just as you cite for employees in other companies. As for VAT, what do you mean when it is ‘spent’? A fully VAT registered company is only a collector of VAT ie it charges VAT on its goods and services and pays VAT on its purchases and either pays or receives the net surplus/deficit to/from the government. Everyone pays VAT when goods are bought in a personal capacity, company directors and Joe Public alike. Company Directors pay themselves in dividends and minimal salary because it’s tax efficient to do so. For no other reason! | |||
"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? " 80% of profits | |||
"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? 80% of profits " Why do people who don’t understand something insist on giving false information/advice to others ? | |||
"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? 80% of profits " Just no! Have you read any of this thread? | |||
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"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? 80% of profits Why do people who don’t understand something insist on giving false information/advice to others ?" Ok look it up on the HRMC website Surely a person who is at a company director level would have an accountant to explain the process in layman’s terms If they don’t understand something themselves? or the COO/CFO would be able to explain the process to them rather than seeking advise from a swingers site? | |||
"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? 80% of profits Just no! Have you read any of this thread?" Ok look it up on the HRMC website Surely a person who is at a company director level would have an accountant to explain the process in layman’s terms If they don’t understand something themselves? or the COO/CFO would be able to explain the process to them rather than seeking advise from a swingers site? | |||
"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? 80% of profits Just no! Have you read any of this thread? Ok look it up on the HRMC website Surely a person who is at a company director level would have an accountant to explain the process in layman’s terms If they don’t understand something themselves? or the COO/CFO would be able to explain the process to them rather than seeking advise from a swingers site?" They certainly shouldn’t be receiving it from you! They can claim a taxable grant worth 80% of their profits UP TO A MAXIMUM OF £2500 Per month. That’s a hell of a lot different to 80% of profits. | |||
"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? 80% of profits Just no! Have you read any of this thread? Ok look it up on the HRMC website Surely a person who is at a company director level would have an accountant to explain the process in layman’s terms If they don’t understand something themselves? or the COO/CFO would be able to explain the process to them rather than seeking advise from a swingers site? They certainly shouldn’t be receiving it from you! They can claim a taxable grant worth 80% of their profits UP TO A MAXIMUM OF £2500 Per month. That’s a hell of a lot different to 80% of profits. " That’s what I said hahaha  | |||
"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? 80% of profits Just no! Have you read any of this thread? Ok look it up on the HRMC website Surely a person who is at a company director level would have an accountant to explain the process in layman’s terms If they don’t understand something themselves? or the COO/CFO would be able to explain the process to them rather than seeking advise from a swingers site? They certainly shouldn’t be receiving it from you! They can claim a taxable grant worth 80% of their profits UP TO A MAXIMUM OF £2500 Per month. That’s a hell of a lot different to 80% of profits. " Just to clarify, what I’ve said above is in relation to self employed. Company directors will only receive 80% of their salaries, not company profits. | |||
"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? 80% of profits Just no! Have you read any of this thread? Ok look it up on the HRMC website Surely a person who is at a company director level would have an accountant to explain the process in layman’s terms If they don’t understand something themselves? or the COO/CFO would be able to explain the process to them rather than seeking advise from a swingers site? They certainly shouldn’t be receiving it from you! They can claim a taxable grant worth 80% of their profits UP TO A MAXIMUM OF £2500 Per month. That’s a hell of a lot different to 80% of profits. That’s what I said hahaha "Er no and you’re still wrong. | |||
"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? 80% of profits Just no! Have you read any of this thread? Ok look it up on the HRMC website Surely a person who is at a company director level would have an accountant to explain the process in layman’s terms If they don’t understand something themselves? or the COO/CFO would be able to explain the process to them rather than seeking advise from a swingers site? They certainly shouldn’t be receiving it from you! They can claim a taxable grant worth 80% of their profits UP TO A MAXIMUM OF £2500 Per month. That’s a hell of a lot different to 80% of profits. That’s what I said hahaha
Er no and you’re still wrong."To which good sir he’s stated he gets dividends 80% of a 0% salary is still 0% | |||
"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? 80% of profits Just no! Have you read any of this thread? Ok look it up on the HRMC website Surely a person who is at a company director level would have an accountant to explain the process in layman’s terms If they don’t understand something themselves? or the COO/CFO would be able to explain the process to them rather than seeking advise from a swingers site? They certainly shouldn’t be receiving it from you! They can claim a taxable grant worth 80% of their profits UP TO A MAXIMUM OF £2500 Per month. That’s a hell of a lot different to 80% of profits. That’s what I said hahaha
Er no and you’re still wrong.
To which good sir he’s stated he gets dividends
80% of a 0% salary is still 0% "If you had any idea as to what you are talking about, which clearly you don’t, you would realise that he will undoubtably receive a nominal salary, either up to the NIC threshold or the personal allowance threshold and the balance in dividends to maximise the tax efficiency. | |||
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"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? 80% of profits Just no! Have you read any of this thread? Ok look it up on the HRMC website Surely a person who is at a company director level would have an accountant to explain the process in layman’s terms If they don’t understand something themselves? or the COO/CFO would be able to explain the process to them rather than seeking advise from a swingers site? They certainly shouldn’t be receiving it from you! They can claim a taxable grant worth 80% of their profits UP TO A MAXIMUM OF £2500 Per month. That’s a hell of a lot different to 80% of profits. That’s what I said hahaha
Er no and you’re still wrong.
To which good sir he’s stated he gets dividends
80% of a 0% salary is still 0%
If you had any idea as to what you are talking about, which clearly you don’t, you would realise that he will undoubtably receive a nominal salary, either up to the NIC threshold or the personal allowance threshold and the balance in dividends to maximise the tax efficiency."Ok look it up on the HRMC website Surely a person who is at a company director level would have an accountant to explain the process in layman’s terms If they don’t understand something themselves? or the COO/CFO would be able to explain the process to them rather than seeking advise from a swingers site? | |||
"I know a lot of people are sat about bored. But the amount of people that make a incorrect comment on something they know nothing about. Reminds me of that scene in the office where Brent keeps going to his computer and then making casual comments as though he actually knew it before hand " Ok look it up on the HRMC website Surely a person who is at a company director level would have an accountant to explain the process in layman’s terms If they don’t understand something themselves? or the COO/CFO would be able to explain the process to them rather than seeking advise from a swingers site? | |||
"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? 80% of profits Just no! Have you read any of this thread? Ok look it up on the HRMC website Surely a person who is at a company director level would have an accountant to explain the process in layman’s terms If they don’t understand something themselves? or the COO/CFO would be able to explain the process to them rather than seeking advise from a swingers site? They certainly shouldn’t be receiving it from you! They can claim a taxable grant worth 80% of their profits UP TO A MAXIMUM OF £2500 Per month. That’s a hell of a lot different to 80% of profits. That’s what I said hahaha
Er no and you’re still wrong.
To which good sir he’s stated he gets dividends
80% of a 0% salary is still 0%
If you had any idea as to what you are talking about, which clearly you don’t, you would realise that he will undoubtably receive a nominal salary, either up to the NIC threshold or the personal allowance threshold and the balance in dividends to maximise the tax efficiency.
Ok look it up on the HRMC website
Surely a person who is at a company director level would have an accountant to explain the process in layman’s terms If they don’t understand something themselves?
or the COO/CFO would be able to explain the process to them rather than seeking advise from a swingers site?
"Just because you’re repeating yourself doesn’t make you any more right! I would agree with you about people seeking financial advice on a swingers site but if you feel as strongly about this as you purport to, then why attempt to give advice when you obviously don’t have a clue as to what you are talking about? And please don’t just say look at the HMRC website again! Also, if we are talking about a sole director of a company, you do realise that he he will also be the COO, CFO and chief dogsbody? | |||
"Does anyone know if you are a company director paid via divends do you get money on the self employed route announced last night? 80% of profits Just no! Have you read any of this thread? Ok look it up on the HRMC website Surely a person who is at a company director level would have an accountant to explain the process in layman’s terms If they don’t understand something themselves? or the COO/CFO would be able to explain the process to them rather than seeking advise from a swingers site? They certainly shouldn’t be receiving it from you! They can claim a taxable grant worth 80% of their profits UP TO A MAXIMUM OF £2500 Per month. That’s a hell of a lot different to 80% of profits. That’s what I said hahaha
Er no and you’re still wrong.
To which good sir he’s stated he gets dividends
80% of a 0% salary is still 0%
If you had any idea as to what you are talking about, which clearly you don’t, you would realise that he will undoubtably receive a nominal salary, either up to the NIC threshold or the personal allowance threshold and the balance in dividends to maximise the tax efficiency.
Ok look it up on the HRMC website
Surely a person who is at a company director level would have an accountant to explain the process in layman’s terms If they don’t understand something themselves?
or the COO/CFO would be able to explain the process to them rather than seeking advise from a swingers site?
Just because you’re repeating yourself doesn’t make you any more right!
I would agree with you about people seeking financial advice on a swingers site but if you feel as strongly about this as you purport to, then why attempt to give advice when you obviously don’t have a clue as to what you are talking about? And please don’t just say look at the HMRC website again!
Also, if we are talking about a sole director of a company, you do realise that he he will also be the COO, CFO and chief dogsbody?
"https://www.gov.uk/log-in-register-hmrc-online-services | |||
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"https://www.ipse.co.uk/ipse-news/ipse-blog/ltd-co-contractors-covid-support-selfemployed.html "While sole traders can look forward to a potentially substantial grant in around two months’ time, Ltd Co directors will get no such benefit. Instead, the options available to you look thin at the moment – the Coronavirus Business Interruption Loans, the ability to defer or delay some tax payments, possible recourse to Universal Credit, and the ability to effectively ‘furlough’ yourself in order to access 80% of your PAYE earnings through the COVID Job Retention Scheme (we’ve had it on very, very good authority that you can do this, though there is some doubt circulating, and we are seeking clarification)." Do you remember the chancellor saying on TV that he stood behind each and everyone of us? Well that's just a lie. I knew from day 1 I’d get no support. I understand the risks of self employment. But I pay my taxes. I don’t tax dodge in the Cayman Islands etc I pay mine. I’ve applied for universal credit today so I’ll await the outcome of that. I’ve no doubt I’ll not get it The thing is you have received a significant tax reduction by paying yourself in dividends rather than a salary that’s subject to PAYE but unfortunately that’s come back to bite you. You claim that you pay all your taxes but VAT has nothing to do with you, you are just the tax collector and Corporation Tax is the tax on your profits, just as employees pay PAYE upon their taxable salaries. I suspect that once this is all over, the tax benefit of paying dividends over salary will be nullified. There is misconception that LLC directors pay less tax. The fact is that LLC diectors now pay tax on dividends. If you look at those you will see that the tax brackets hammer the average income earner whilst being very lenient on the megga income earners. There is a higher percentage jump from low to middle than there is from low to high. Whilst the HMRC has been demonising contractors saying 90% of them operate outside of the law. However when challenged to provide proof of this claim HMRC were unable to do so. Please do not subscribe to the HMRC propoganda machine. Contracting is a perfectly legal and honest profession. A flexible workforce is a vital part of our economy. Yes contractors get paid more. But they take more risks, get no sick leave or holiday pay or income when there is no work. To kill the entrepreneurial spirit and make us all workers is to keep people with ambition from realizing their true potential. Why don't people conentrate on the true villains. The giant corporations who don't pay their fair share in taxes? There’s no misconception in my post. A sole director of a company that receives his/her remuneration by a mix of salary and dividends will pay less income tax and NIC than if they were paid the same amount purely as salary? That’s the whole point of the exercise. I don’t believe I mentioned contractors! The misconception, a common misconception not your misconception, is that direcors pay themselves dividends and hence less tax. The truth is that the money they earn is taxed 3 times over. Once as a profit (Corporation Tax), twice when it is issued as a dividend, and again as VAT when it is spent. On the other hand people who earn money as a salary have that money taxed twice because when their company pays them it is an expense. The company they work for pays less tax because of their salaries. That’s nonsense. The Company pays Corporation Tax, not the Director. The Director could, if he wished, take all the profits as salary and then there would be no Corporation Tax payable, only the PAYE on salary. The Directors salary is also an expense against the company’s profits and therefore reduces its tax bill just as you cite for employees in other companies. As for VAT, what do you mean when it is ‘spent’? A fully VAT registered company is only a collector of VAT ie it charges VAT on its goods and services and pays VAT on its purchases and either pays or receives the net surplus/deficit to/from the government. Everyone pays VAT when goods are bought in a personal capacity, company directors and Joe Public alike. Company Directors pay themselves in dividends and minimal salary because it’s tax efficient to do so. For no other reason!" Any money anyone earns is taxed when they pay VAT. My point is that the same money earned is taxed three times over. Sure a director could take that money as a salary & pay NI. But if you think that a director should then you don't understand the differences between running your own company and having a job. Most of these people who supposedly "don't pay tax" pay more tax than what their accusers earn as a salary. When you look at what they charge it seems like a lot. Then you take off 20% VAT, 20% CT, the money they don't earn when they are poorly, the money they don't earn when they take holiday, the money they don't earn when in between contracts. It's not the gravy train it appears at a glance. | |||
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"If you are self employed and are only taking dividends, you should sack your accountant. Ours made contact a few years back and advised that we put ourselves on the payroll as employees as it’s far more tax efficient. " he advised me to pay myself a wage. It’s not his error but mine. I just couldn’t at the time. | |||
"If you are self employed and are only taking dividends, you should sack your accountant. Ours made contact a few years back and advised that we put ourselves on the payroll as employees as it’s far more tax efficient. " All I know is I don't have to worry about IR35 on an overseas contract. But if I'm working overseas why pay UK tax when I could base in somewhere like Malta? At the same time that our government is crying out for technical skills, they are showing us the door. | |||
"If you are self employed and are only taking dividends, you should sack your accountant. Ours made contact a few years back and advised that we put ourselves on the payroll as employees as it’s far more tax efficient. All I know is I don't have to worry about IR35 on an overseas contract. But if I'm working overseas why pay UK tax when I could base in somewhere like Malta? At the same time that our government is crying out for technical skills, they are showing us the door." ir35 has been deferred | |||
"If you are self employed and are only taking dividends, you should sack your accountant. Ours made contact a few years back and advised that we put ourselves on the payroll as employees as it’s far more tax efficient. All I know is I don't have to worry about IR35 on an overseas contract. But if I'm working overseas why pay UK tax when I could base in somewhere like Malta? At the same time that our government is crying out for technical skills, they are showing us the door. ir35 has been deferred " Of course it is. Why hunt a species to extinction when they are about to starve to death anyway? 
| |||
"https://www.ipse.co.uk/ipse-news/ipse-blog/ltd-co-contractors-covid-support-selfemployed.html "While sole traders can look forward to a potentially substantial grant in around two months’ time, Ltd Co directors will get no such benefit. Instead, the options available to you look thin at the moment – the Coronavirus Business Interruption Loans, the ability to defer or delay some tax payments, possible recourse to Universal Credit, and the ability to effectively ‘furlough’ yourself in order to access 80% of your PAYE earnings through the COVID Job Retention Scheme (we’ve had it on very, very good authority that you can do this, though there is some doubt circulating, and we are seeking clarification)." Do you remember the chancellor saying on TV that he stood behind each and everyone of us? Well that's just a lie. I knew from day 1 I’d get no support. I understand the risks of self employment. But I pay my taxes. I don’t tax dodge in the Cayman Islands etc I pay mine. I’ve applied for universal credit today so I’ll await the outcome of that. I’ve no doubt I’ll not get it The thing is you have received a significant tax reduction by paying yourself in dividends rather than a salary that’s subject to PAYE but unfortunately that’s come back to bite you. You claim that you pay all your taxes but VAT has nothing to do with you, you are just the tax collector and Corporation Tax is the tax on your profits, just as employees pay PAYE upon their taxable salaries. I suspect that once this is all over, the tax benefit of paying dividends over salary will be nullified. There is misconception that LLC directors pay less tax. The fact is that LLC diectors now pay tax on dividends. If you look at those you will see that the tax brackets hammer the average income earner whilst being very lenient on the megga income earners. There is a higher percentage jump from low to middle than there is from low to high. Whilst the HMRC has been demonising contractors saying 90% of them operate outside of the law. However when challenged to provide proof of this claim HMRC were unable to do so. Please do not subscribe to the HMRC propoganda machine. Contracting is a perfectly legal and honest profession. A flexible workforce is a vital part of our economy. Yes contractors get paid more. But they take more risks, get no sick leave or holiday pay or income when there is no work. To kill the entrepreneurial spirit and make us all workers is to keep people with ambition from realizing their true potential. Why don't people conentrate on the true villains. The giant corporations who don't pay their fair share in taxes? There’s no misconception in my post. A sole director of a company that receives his/her remuneration by a mix of salary and dividends will pay less income tax and NIC than if they were paid the same amount purely as salary? That’s the whole point of the exercise. I don’t believe I mentioned contractors! The misconception, a common misconception not your misconception, is that direcors pay themselves dividends and hence less tax. The truth is that the money they earn is taxed 3 times over. Once as a profit (Corporation Tax), twice when it is issued as a dividend, and again as VAT when it is spent. On the other hand people who earn money as a salary have that money taxed twice because when their company pays them it is an expense. The company they work for pays less tax because of their salaries. That’s nonsense. The Company pays Corporation Tax, not the Director. The Director could, if he wished, take all the profits as salary and then there would be no Corporation Tax payable, only the PAYE on salary. The Directors salary is also an expense against the company’s profits and therefore reduces its tax bill just as you cite for employees in other companies. As for VAT, what do you mean when it is ‘spent’? A fully VAT registered company is only a collector of VAT ie it charges VAT on its goods and services and pays VAT on its purchases and either pays or receives the net surplus/deficit to/from the government. Everyone pays VAT when goods are bought in a personal capacity, company directors and Joe Public alike. Company Directors pay themselves in dividends and minimal salary because it’s tax efficient to do so. For no other reason! Any money anyone earns is taxed when they pay VAT. My point is that the same money earned is taxed three times over. Sure a director could take that money as a salary & pay NI. But if you think that a director should then you don't understand the differences between running your own company and having a job. Most of these people who supposedly "don't pay tax" pay more tax than what their accusers earn as a salary. When you look at what they charge it seems like a lot. Then you take off 20% VAT, 20% CT, the money they don't earn when they are poorly, the money they don't earn when they take holiday, the money they don't earn when in between contracts. It's not the gravy train it appears at a glance. " I suspect I understand this a lot more than you do. | |||
"If you are self employed and are only taking dividends, you should sack your accountant. Ours made contact a few years back and advised that we put ourselves on the payroll as employees as it’s far more tax efficient. All I know is I don't have to worry about IR35 on an overseas contract. But if I'm working overseas why pay UK tax when I could base in somewhere like Malta? At the same time that our government is crying out for technical skills, they are showing us the door. ir35 has been deferred " Are you aware that a plethora of contractors legitimately outside IR35 were let go by corporations because of blanket policies applied to contractors because of IR35. Those contractors are currently without work and desperately looking for work in a climate where even the permanently employed are at home. They are well and truly screwed by an IR35 that didn't happen. | |||
"https://www.ipse.co.uk/ipse-news/ipse-blog/ltd-co-contractors-covid-support-selfemployed.html "While sole traders can look forward to a potentially substantial grant in around two months’ time, Ltd Co directors will get no such benefit. Instead, the options available to you look thin at the moment – the Coronavirus Business Interruption Loans, the ability to defer or delay some tax payments, possible recourse to Universal Credit, and the ability to effectively ‘furlough’ yourself in order to access 80% of your PAYE earnings through the COVID Job Retention Scheme (we’ve had it on very, very good authority that you can do this, though there is some doubt circulating, and we are seeking clarification)." Do you remember the chancellor saying on TV that he stood behind each and everyone of us? Well that's just a lie. I knew from day 1 I’d get no support. I understand the risks of self employment. But I pay my taxes. I don’t tax dodge in the Cayman Islands etc I pay mine. I’ve applied for universal credit today so I’ll await the outcome of that. I’ve no doubt I’ll not get it The thing is you have received a significant tax reduction by paying yourself in dividends rather than a salary that’s subject to PAYE but unfortunately that’s come back to bite you. You claim that you pay all your taxes but VAT has nothing to do with you, you are just the tax collector and Corporation Tax is the tax on your profits, just as employees pay PAYE upon their taxable salaries. I suspect that once this is all over, the tax benefit of paying dividends over salary will be nullified. There is misconception that LLC directors pay less tax. The fact is that LLC diectors now pay tax on dividends. If you look at those you will see that the tax brackets hammer the average income earner whilst being very lenient on the megga income earners. There is a higher percentage jump from low to middle than there is from low to high. Whilst the HMRC has been demonising contractors saying 90% of them operate outside of the law. However when challenged to provide proof of this claim HMRC were unable to do so. Please do not subscribe to the HMRC propoganda machine. Contracting is a perfectly legal and honest profession. A flexible workforce is a vital part of our economy. Yes contractors get paid more. But they take more risks, get no sick leave or holiday pay or income when there is no work. To kill the entrepreneurial spirit and make us all workers is to keep people with ambition from realizing their true potential. Why don't people conentrate on the true villains. The giant corporations who don't pay their fair share in taxes? There’s no misconception in my post. A sole director of a company that receives his/her remuneration by a mix of salary and dividends will pay less income tax and NIC than if they were paid the same amount purely as salary? That’s the whole point of the exercise. I don’t believe I mentioned contractors! The misconception, a common misconception not your misconception, is that direcors pay themselves dividends and hence less tax. The truth is that the money they earn is taxed 3 times over. Once as a profit (Corporation Tax), twice when it is issued as a dividend, and again as VAT when it is spent. On the other hand people who earn money as a salary have that money taxed twice because when their company pays them it is an expense. The company they work for pays less tax because of their salaries. That’s nonsense. The Company pays Corporation Tax, not the Director. The Director could, if he wished, take all the profits as salary and then there would be no Corporation Tax payable, only the PAYE on salary. The Directors salary is also an expense against the company’s profits and therefore reduces its tax bill just as you cite for employees in other companies. As for VAT, what do you mean when it is ‘spent’? A fully VAT registered company is only a collector of VAT ie it charges VAT on its goods and services and pays VAT on its purchases and either pays or receives the net surplus/deficit to/from the government. Everyone pays VAT when goods are bought in a personal capacity, company directors and Joe Public alike. Company Directors pay themselves in dividends and minimal salary because it’s tax efficient to do so. For no other reason! Any money anyone earns is taxed when they pay VAT. My point is that the same money earned is taxed three times over. Sure a director could take that money as a salary & pay NI. But if you think that a director should then you don't understand the differences between running your own company and having a job. Most of these people who supposedly "don't pay tax" pay more tax than what their accusers earn as a salary. When you look at what they charge it seems like a lot. Then you take off 20% VAT, 20% CT, the money they don't earn when they are poorly, the money they don't earn when they take holiday, the money they don't earn when in between contracts. It's not the gravy train it appears at a glance. I suspect I understand this a lot more than you do. " Of course. I'm very very stupid. You're setting the bar low. According to many highly intelligent accountants the main difference between salary vs dividends is NI. But they are also probably stupid. https://www.accountsandlegal.co.uk/tax-advice/are-dividends-still-more-tax-efficient-than-a-large-salary | |||
"https://www.ipse.co.uk/ipse-news/ipse-blog/ltd-co-contractors-covid-support-selfemployed.html "While sole traders can look forward to a potentially substantial grant in around two months’ time, Ltd Co directors will get no such benefit. Instead, the options available to you look thin at the moment – the Coronavirus Business Interruption Loans, the ability to defer or delay some tax payments, possible recourse to Universal Credit, and the ability to effectively ‘furlough’ yourself in order to access 80% of your PAYE earnings through the COVID Job Retention Scheme (we’ve had it on very, very good authority that you can do this, though there is some doubt circulating, and we are seeking clarification)." Do you remember the chancellor saying on TV that he stood behind each and everyone of us? Well that's just a lie. I knew from day 1 I’d get no support. I understand the risks of self employment. But I pay my taxes. I don’t tax dodge in the Cayman Islands etc I pay mine. I’ve applied for universal credit today so I’ll await the outcome of that. I’ve no doubt I’ll not get it The thing is you have received a significant tax reduction by paying yourself in dividends rather than a salary that’s subject to PAYE but unfortunately that’s come back to bite you. You claim that you pay all your taxes but VAT has nothing to do with you, you are just the tax collector and Corporation Tax is the tax on your profits, just as employees pay PAYE upon their taxable salaries. I suspect that once this is all over, the tax benefit of paying dividends over salary will be nullified. There is misconception that LLC directors pay less tax. The fact is that LLC diectors now pay tax on dividends. If you look at those you will see that the tax brackets hammer the average income earner whilst being very lenient on the megga income earners. There is a higher percentage jump from low to middle than there is from low to high. Whilst the HMRC has been demonising contractors saying 90% of them operate outside of the law. However when challenged to provide proof of this claim HMRC were unable to do so. Please do not subscribe to the HMRC propoganda machine. Contracting is a perfectly legal and honest profession. A flexible workforce is a vital part of our economy. Yes contractors get paid more. But they take more risks, get no sick leave or holiday pay or income when there is no work. To kill the entrepreneurial spirit and make us all workers is to keep people with ambition from realizing their true potential. Why don't people conentrate on the true villains. The giant corporations who don't pay their fair share in taxes? There’s no misconception in my post. A sole director of a company that receives his/her remuneration by a mix of salary and dividends will pay less income tax and NIC than if they were paid the same amount purely as salary? That’s the whole point of the exercise. I don’t believe I mentioned contractors! The misconception, a common misconception not your misconception, is that direcors pay themselves dividends and hence less tax. The truth is that the money they earn is taxed 3 times over. Once as a profit (Corporation Tax), twice when it is issued as a dividend, and again as VAT when it is spent. On the other hand people who earn money as a salary have that money taxed twice because when their company pays them it is an expense. The company they work for pays less tax because of their salaries. That’s nonsense. The Company pays Corporation Tax, not the Director. The Director could, if he wished, take all the profits as salary and then there would be no Corporation Tax payable, only the PAYE on salary. The Directors salary is also an expense against the company’s profits and therefore reduces its tax bill just as you cite for employees in other companies. As for VAT, what do you mean when it is ‘spent’? A fully VAT registered company is only a collector of VAT ie it charges VAT on its goods and services and pays VAT on its purchases and either pays or receives the net surplus/deficit to/from the government. Everyone pays VAT when goods are bought in a personal capacity, company directors and Joe Public alike. Company Directors pay themselves in dividends and minimal salary because it’s tax efficient to do so. For no other reason! Any money anyone earns is taxed when they pay VAT. My point is that the same money earned is taxed three times over. Sure a director could take that money as a salary & pay NI. But if you think that a director should then you don't understand the differences between running your own company and having a job. Most of these people who supposedly "don't pay tax" pay more tax than what their accusers earn as a salary. When you look at what they charge it seems like a lot. Then you take off 20% VAT, 20% CT, the money they don't earn when they are poorly, the money they don't earn when they take holiday, the money they don't earn when in between contracts. It's not the gravy train it appears at a glance. I suspect I understand this a lot more than you do. Of course. I'm very very stupid. You're setting the bar low. According to many highly intelligent accountants the main difference between salary vs dividends is NI. But they are also probably stupid. https://www.accountsandlegal.co.uk/tax-advice/are-dividends-still-more-tax-efficient-than-a-large-salary" Thank you for providing a link back to 2016. I’m required to keep much more up to date in my professional capacity. All the article in your Lon Kruger says is actually what I said much earlier in this thread, that sole directors of companies take a minimal salary and receive dividends because its tax efficient to do so, both in terms of PAYE and NI And nobody insinuated anyone was stupid | |||
| |||
"It taking a dividend some kind of way of dodging tax etc ? I don't really understand it. No it’s a legal way to reduce not dodge tax, but it’s a really bad idea You used to save on tax but the change in laws doesn't make it as beneficial as it used to be as you also pay personal tax @ 7% in any dividends after the 1st £3000" Thanks x | |||
"https://www.ipse.co.uk/ipse-news/ipse-blog/ltd-co-contractors-covid-support-selfemployed.html "While sole traders can look forward to a potentially substantial grant in around two months’ time, Ltd Co directors will get no such benefit. Instead, the options available to you look thin at the moment – the Coronavirus Business Interruption Loans, the ability to defer or delay some tax payments, possible recourse to Universal Credit, and the ability to effectively ‘furlough’ yourself in order to access 80% of your PAYE earnings through the COVID Job Retention Scheme (we’ve had it on very, very good authority that you can do this, though there is some doubt circulating, and we are seeking clarification)." Do you remember the chancellor saying on TV that he stood behind each and everyone of us? Well that's just a lie. I knew from day 1 I’d get no support. I understand the risks of self employment. But I pay my taxes. I don’t tax dodge in the Cayman Islands etc I pay mine. I’ve applied for universal credit today so I’ll await the outcome of that. I’ve no doubt I’ll not get it The thing is you have received a significant tax reduction by paying yourself in dividends rather than a salary that’s subject to PAYE but unfortunately that’s come back to bite you. You claim that you pay all your taxes but VAT has nothing to do with you, you are just the tax collector and Corporation Tax is the tax on your profits, just as employees pay PAYE upon their taxable salaries. I suspect that once this is all over, the tax benefit of paying dividends over salary will be nullified. There is misconception that LLC directors pay less tax. The fact is that LLC diectors now pay tax on dividends. If you look at those you will see that the tax brackets hammer the average income earner whilst being very lenient on the megga income earners. There is a higher percentage jump from low to middle than there is from low to high. Whilst the HMRC has been demonising contractors saying 90% of them operate outside of the law. However when challenged to provide proof of this claim HMRC were unable to do so. Please do not subscribe to the HMRC propoganda machine. Contracting is a perfectly legal and honest profession. A flexible workforce is a vital part of our economy. Yes contractors get paid more. But they take more risks, get no sick leave or holiday pay or income when there is no work. To kill the entrepreneurial spirit and make us all workers is to keep people with ambition from realizing their true potential. Why don't people conentrate on the true villains. The giant corporations who don't pay their fair share in taxes? There’s no misconception in my post. A sole director of a company that receives his/her remuneration by a mix of salary and dividends will pay less income tax and NIC than if they were paid the same amount purely as salary? That’s the whole point of the exercise. I don’t believe I mentioned contractors! The misconception, a common misconception not your misconception, is that direcors pay themselves dividends and hence less tax. The truth is that the money they earn is taxed 3 times over. Once as a profit (Corporation Tax), twice when it is issued as a dividend, and again as VAT when it is spent. On the other hand people who earn money as a salary have that money taxed twice because when their company pays them it is an expense. The company they work for pays less tax because of their salaries. That’s nonsense. The Company pays Corporation Tax, not the Director. The Director could, if he wished, take all the profits as salary and then there would be no Corporation Tax payable, only the PAYE on salary. The Directors salary is also an expense against the company’s profits and therefore reduces its tax bill just as you cite for employees in other companies. As for VAT, what do you mean when it is ‘spent’? A fully VAT registered company is only a collector of VAT ie it charges VAT on its goods and services and pays VAT on its purchases and either pays or receives the net surplus/deficit to/from the government. Everyone pays VAT when goods are bought in a personal capacity, company directors and Joe Public alike. Company Directors pay themselves in dividends and minimal salary because it’s tax efficient to do so. For no other reason! Any money anyone earns is taxed when they pay VAT. My point is that the same money earned is taxed three times over. Sure a director could take that money as a salary & pay NI. But if you think that a director should then you don't understand the differences between running your own company and having a job. Most of these people who supposedly "don't pay tax" pay more tax than what their accusers earn as a salary. When you look at what they charge it seems like a lot. Then you take off 20% VAT, 20% CT, the money they don't earn when they are poorly, the money they don't earn when they take holiday, the money they don't earn when in between contracts. It's not the gravy train it appears at a glance. I suspect I understand this a lot more than you do. Of course. I'm very very stupid. You're setting the bar low. According to many highly intelligent accountants the main difference between salary vs dividends is NI. But they are also probably stupid. https://www.accountsandlegal.co.uk/tax-advice/are-dividends-still-more-tax-efficient-than-a-large-salary Thank you for providing a link back to 2016. I’m required to keep much more up to date in my professional capacity. All the article in your Lon Kruger says is actually what I said much earlier in this thread, that sole directors of companies take a minimal salary and receive dividends because its tax efficient to do so, both in terms of PAYE and NI And nobody insinuated anyone was stupid" Considering I am the director of an LLC and still know nothing about tax I must be stupid. Thanks for providing no link at all. Since 2016 we have an increase in flat rate VAT payback and a new dividend tax that never existed before. That 7.5% that others are referring to applies to the lower rate group. Thereafter it goes up to 32.5% not an enormous difference to 40%. Then consider as stated before that a salary is an expense to a company whereas a dividend is not. Notably we have more than 3 fold increase to hammer the middle earners (7.5 to 32.5) then the smallest of all increments for the upper earners. There is NO further increment after 38.1 whether you earn 150 thousand or 150 million it's the same. | |||
"It taking a dividend some kind of way of dodging tax etc ? I don't really understand it. No it’s a legal way to reduce not dodge tax, but it’s a really bad idea You used to save on tax but the change in laws doesn't make it as beneficial as it used to be as you also pay personal tax @ 7% in any dividends after the 1st £3000 Thanks x" Simply put. Pay yourself £719 as as salary and no more than £37 000 in dividends. | |||
"It taking a dividend some kind of way of dodging tax etc ? I don't really understand it. No it’s a legal way to reduce not dodge tax, but it’s a really bad idea You used to save on tax but the change in laws doesn't make it as beneficial as it used to be as you also pay personal tax @ 7% in any dividends after the 1st £3000 Thanks x Simply put. Pay yourself £719 as as salary and no more than £37 000 in dividends. " Even more simply ( and correctly) put, pay your self £12500 in salary and £37500 in dividends | |||
"https://www.ipse.co.uk/ipse-news/ipse-blog/ltd-co-contractors-covid-support-selfemployed.html "While sole traders can look forward to a potentially substantial grant in around two months’ time, Ltd Co directors will get no such benefit. Instead, the options available to you look thin at the moment – the Coronavirus Business Interruption Loans, the ability to defer or delay some tax payments, possible recourse to Universal Credit, and the ability to effectively ‘furlough’ yourself in order to access 80% of your PAYE earnings through the COVID Job Retention Scheme (we’ve had it on very, very good authority that you can do this, though there is some doubt circulating, and we are seeking clarification)." Do you remember the chancellor saying on TV that he stood behind each and everyone of us? Well that's just a lie. I knew from day 1 I’d get no support. I understand the risks of self employment. But I pay my taxes. I don’t tax dodge in the Cayman Islands etc I pay mine. I’ve applied for universal credit today so I’ll await the outcome of that. I’ve no doubt I’ll not get it The thing is you have received a significant tax reduction by paying yourself in dividends rather than a salary that’s subject to PAYE but unfortunately that’s come back to bite you. You claim that you pay all your taxes but VAT has nothing to do with you, you are just the tax collector and Corporation Tax is the tax on your profits, just as employees pay PAYE upon their taxable salaries. I suspect that once this is all over, the tax benefit of paying dividends over salary will be nullified. There is misconception that LLC directors pay less tax. The fact is that LLC diectors now pay tax on dividends. If you look at those you will see that the tax brackets hammer the average income earner whilst being very lenient on the megga income earners. There is a higher percentage jump from low to middle than there is from low to high. Whilst the HMRC has been demonising contractors saying 90% of them operate outside of the law. However when challenged to provide proof of this claim HMRC were unable to do so. Please do not subscribe to the HMRC propoganda machine. Contracting is a perfectly legal and honest profession. A flexible workforce is a vital part of our economy. Yes contractors get paid more. But they take more risks, get no sick leave or holiday pay or income when there is no work. To kill the entrepreneurial spirit and make us all workers is to keep people with ambition from realizing their true potential. Why don't people conentrate on the true villains. The giant corporations who don't pay their fair share in taxes? There’s no misconception in my post. A sole director of a company that receives his/her remuneration by a mix of salary and dividends will pay less income tax and NIC than if they were paid the same amount purely as salary? That’s the whole point of the exercise. I don’t believe I mentioned contractors! The misconception, a common misconception not your misconception, is that direcors pay themselves dividends and hence less tax. The truth is that the money they earn is taxed 3 times over. Once as a profit (Corporation Tax), twice when it is issued as a dividend, and again as VAT when it is spent. On the other hand people who earn money as a salary have that money taxed twice because when their company pays them it is an expense. The company they work for pays less tax because of their salaries. That’s nonsense. The Company pays Corporation Tax, not the Director. The Director could, if he wished, take all the profits as salary and then there would be no Corporation Tax payable, only the PAYE on salary. The Directors salary is also an expense against the company’s profits and therefore reduces its tax bill just as you cite for employees in other companies. As for VAT, what do you mean when it is ‘spent’? A fully VAT registered company is only a collector of VAT ie it charges VAT on its goods and services and pays VAT on its purchases and either pays or receives the net surplus/deficit to/from the government. Everyone pays VAT when goods are bought in a personal capacity, company directors and Joe Public alike. Company Directors pay themselves in dividends and minimal salary because it’s tax efficient to do so. For no other reason! Any money anyone earns is taxed when they pay VAT. My point is that the same money earned is taxed three times over. Sure a director could take that money as a salary & pay NI. But if you think that a director should then you don't understand the differences between running your own company and having a job. Most of these people who supposedly "don't pay tax" pay more tax than what their accusers earn as a salary. When you look at what they charge it seems like a lot. Then you take off 20% VAT, 20% CT, the money they don't earn when they are poorly, the money they don't earn when they take holiday, the money they don't earn when in between contracts. It's not the gravy train it appears at a glance. I suspect I understand this a lot more than you do. Of course. I'm very very stupid. You're setting the bar low. According to many highly intelligent accountants the main difference between salary vs dividends is NI. But they are also probably stupid. https://www.accountsandlegal.co.uk/tax-advice/are-dividends-still-more-tax-efficient-than-a-large-salary Thank you for providing a link back to 2016. I’m required to keep much more up to date in my professional capacity. All the article in your Lon Kruger says is actually what I said much earlier in this thread, that sole directors of companies take a minimal salary and receive dividends because its tax efficient to do so, both in terms of PAYE and NI And nobody insinuated anyone was stupid Considering I am the director of an LLC and still know nothing about tax I must be stupid. Thanks for providing no link at all. Since 2016 we have an increase in flat rate VAT payback and a new dividend tax that never existed before. That 7.5% that others are referring to applies to the lower rate group. Thereafter it goes up to 32.5% not an enormous difference to 40%. Then consider as stated before that a salary is an expense to a company whereas a dividend is not. Notably we have more than 3 fold increase to hammer the middle earners (7.5 to 32.5) then the smallest of all increments for the upper earners. There is NO further increment after 38.1 whether you earn 150 thousand or 150 million it's the same." The link you provided confirms that the advice is still to pay small salary plus dividend. The illustration they use on a £60k salary shows a tax difference of £10k better off continuing to use the dividend method . | |||
"https://www.ipse.co.uk/ipse-news/ipse-blog/ltd-co-contractors-covid-support-selfemployed.html "While sole traders can look forward to a potentially substantial grant in around two months’ time, Ltd Co directors will get no such benefit. Instead, the options available to you look thin at the moment – the Coronavirus Business Interruption Loans, the ability to defer or delay some tax payments, possible recourse to Universal Credit, and the ability to effectively ‘furlough’ yourself in order to access 80% of your PAYE earnings through the COVID Job Retention Scheme (we’ve had it on very, very good authority that you can do this, though there is some doubt circulating, and we are seeking clarification)." Do you remember the chancellor saying on TV that he stood behind each and everyone of us? Well that's just a lie. I knew from day 1 I’d get no support. I understand the risks of self employment. But I pay my taxes. I don’t tax dodge in the Cayman Islands etc I pay mine. I’ve applied for universal credit today so I’ll await the outcome of that. I’ve no doubt I’ll not get it The thing is you have received a significant tax reduction by paying yourself in dividends rather than a salary that’s subject to PAYE but unfortunately that’s come back to bite you. You claim that you pay all your taxes but VAT has nothing to do with you, you are just the tax collector and Corporation Tax is the tax on your profits, just as employees pay PAYE upon their taxable salaries. I suspect that once this is all over, the tax benefit of paying dividends over salary will be nullified. There is misconception that LLC directors pay less tax. The fact is that LLC diectors now pay tax on dividends. If you look at those you will see that the tax brackets hammer the average income earner whilst being very lenient on the megga income earners. There is a higher percentage jump from low to middle than there is from low to high. Whilst the HMRC has been demonising contractors saying 90% of them operate outside of the law. However when challenged to provide proof of this claim HMRC were unable to do so. Please do not subscribe to the HMRC propoganda machine. Contracting is a perfectly legal and honest profession. A flexible workforce is a vital part of our economy. Yes contractors get paid more. But they take more risks, get no sick leave or holiday pay or income when there is no work. To kill the entrepreneurial spirit and make us all workers is to keep people with ambition from realizing their true potential. Why don't people conentrate on the true villains. The giant corporations who don't pay their fair share in taxes? There’s no misconception in my post. A sole director of a company that receives his/her remuneration by a mix of salary and dividends will pay less income tax and NIC than if they were paid the same amount purely as salary? That’s the whole point of the exercise. I don’t believe I mentioned contractors! The misconception, a common misconception not your misconception, is that direcors pay themselves dividends and hence less tax. The truth is that the money they earn is taxed 3 times over. Once as a profit (Corporation Tax), twice when it is issued as a dividend, and again as VAT when it is spent. On the other hand people who earn money as a salary have that money taxed twice because when their company pays them it is an expense. The company they work for pays less tax because of their salaries. That’s nonsense. The Company pays Corporation Tax, not the Director. The Director could, if he wished, take all the profits as salary and then there would be no Corporation Tax payable, only the PAYE on salary. The Directors salary is also an expense against the company’s profits and therefore reduces its tax bill just as you cite for employees in other companies. As for VAT, what do you mean when it is ‘spent’? A fully VAT registered company is only a collector of VAT ie it charges VAT on its goods and services and pays VAT on its purchases and either pays or receives the net surplus/deficit to/from the government. Everyone pays VAT when goods are bought in a personal capacity, company directors and Joe Public alike. Company Directors pay themselves in dividends and minimal salary because it’s tax efficient to do so. For no other reason! Any money anyone earns is taxed when they pay VAT. My point is that the same money earned is taxed three times over. Sure a director could take that money as a salary & pay NI. But if you think that a director should then you don't understand the differences between running your own company and having a job. Most of these people who supposedly "don't pay tax" pay more tax than what their accusers earn as a salary. When you look at what they charge it seems like a lot. Then you take off 20% VAT, 20% CT, the money they don't earn when they are poorly, the money they don't earn when they take holiday, the money they don't earn when in between contracts. It's not the gravy train it appears at a glance. I suspect I understand this a lot more than you do. Of course. I'm very very stupid. You're setting the bar low. According to many highly intelligent accountants the main difference between salary vs dividends is NI. But they are also probably stupid. https://www.accountsandlegal.co.uk/tax-advice/are-dividends-still-more-tax-efficient-than-a-large-salary Thank you for providing a link back to 2016. I’m required to keep much more up to date in my professional capacity. All the article in your Lon Kruger says is actually what I said much earlier in this thread, that sole directors of companies take a minimal salary and receive dividends because its tax efficient to do so, both in terms of PAYE and NI And nobody insinuated anyone was stupid Considering I am the director of an LLC and still know nothing about tax I must be stupid. Thanks for providing no link at all. Since 2016 we have an increase in flat rate VAT payback and a new dividend tax that never existed before. That 7.5% that others are referring to applies to the lower rate group. Thereafter it goes up to 32.5% not an enormous difference to 40%. Then consider as stated before that a salary is an expense to a company whereas a dividend is not. Notably we have more than 3 fold increase to hammer the middle earners (7.5 to 32.5) then the smallest of all increments for the upper earners. There is NO further increment after 38.1 whether you earn 150 thousand or 150 million it's the same. The link you provided confirms that the advice is still to pay small salary plus dividend. The illustration they use on a £60k salary shows a tax difference of £10k better off continuing to use the dividend method . " You’re now arguing against yourself. YOU provided that link! | |||
"https://www.ipse.co.uk/ipse-news/ipse-blog/ltd-co-contractors-covid-support-selfemployed.html "While sole traders can look forward to a potentially substantial grant in around two months’ time, Ltd Co directors will get no such benefit. Instead, the options available to you look thin at the moment – the Coronavirus Business Interruption Loans, the ability to defer or delay some tax payments, possible recourse to Universal Credit, and the ability to effectively ‘furlough’ yourself in order to access 80% of your PAYE earnings through the COVID Job Retention Scheme (we’ve had it on very, very good authority that you can do this, though there is some doubt circulating, and we are seeking clarification)." Do you remember the chancellor saying on TV that he stood behind each and everyone of us? Well that's just a lie. I knew from day 1 I’d get no support. I understand the risks of self employment. But I pay my taxes. I don’t tax dodge in the Cayman Islands etc I pay mine. I’ve applied for universal credit today so I’ll await the outcome of that. I’ve no doubt I’ll not get it The thing is you have received a significant tax reduction by paying yourself in dividends rather than a salary that’s subject to PAYE but unfortunately that’s come back to bite you. You claim that you pay all your taxes but VAT has nothing to do with you, you are just the tax collector and Corporation Tax is the tax on your profits, just as employees pay PAYE upon their taxable salaries. I suspect that once this is all over, the tax benefit of paying dividends over salary will be nullified. There is misconception that LLC directors pay less tax. The fact is that LLC diectors now pay tax on dividends. If you look at those you will see that the tax brackets hammer the average income earner whilst being very lenient on the megga income earners. There is a higher percentage jump from low to middle than there is from low to high. Whilst the HMRC has been demonising contractors saying 90% of them operate outside of the law. However when challenged to provide proof of this claim HMRC were unable to do so. Please do not subscribe to the HMRC propoganda machine. Contracting is a perfectly legal and honest profession. A flexible workforce is a vital part of our economy. Yes contractors get paid more. But they take more risks, get no sick leave or holiday pay or income when there is no work. To kill the entrepreneurial spirit and make us all workers is to keep people with ambition from realizing their true potential. Why don't people conentrate on the true villains. The giant corporations who don't pay their fair share in taxes? There’s no misconception in my post. A sole director of a company that receives his/her remuneration by a mix of salary and dividends will pay less income tax and NIC than if they were paid the same amount purely as salary? That’s the whole point of the exercise. I don’t believe I mentioned contractors! The misconception, a common misconception not your misconception, is that direcors pay themselves dividends and hence less tax. The truth is that the money they earn is taxed 3 times over. Once as a profit (Corporation Tax), twice when it is issued as a dividend, and again as VAT when it is spent. On the other hand people who earn money as a salary have that money taxed twice because when their company pays them it is an expense. The company they work for pays less tax because of their salaries. That’s nonsense. The Company pays Corporation Tax, not the Director. The Director could, if he wished, take all the profits as salary and then there would be no Corporation Tax payable, only the PAYE on salary. The Directors salary is also an expense against the company’s profits and therefore reduces its tax bill just as you cite for employees in other companies. As for VAT, what do you mean when it is ‘spent’? A fully VAT registered company is only a collector of VAT ie it charges VAT on its goods and services and pays VAT on its purchases and either pays or receives the net surplus/deficit to/from the government. Everyone pays VAT when goods are bought in a personal capacity, company directors and Joe Public alike. Company Directors pay themselves in dividends and minimal salary because it’s tax efficient to do so. For no other reason! Any money anyone earns is taxed when they pay VAT. My point is that the same money earned is taxed three times over. Sure a director could take that money as a salary & pay NI. But if you think that a director should then you don't understand the differences between running your own company and having a job. Most of these people who supposedly "don't pay tax" pay more tax than what their accusers earn as a salary. When you look at what they charge it seems like a lot. Then you take off 20% VAT, 20% CT, the money they don't earn when they are poorly, the money they don't earn when they take holiday, the money they don't earn when in between contracts. It's not the gravy train it appears at a glance. I suspect I understand this a lot more than you do. Of course. I'm very very stupid. You're setting the bar low. According to many highly intelligent accountants the main difference between salary vs dividends is NI. But they are also probably stupid. https://www.accountsandlegal.co.uk/tax-advice/are-dividends-still-more-tax-efficient-than-a-large-salary Thank you for providing a link back to 2016. I’m required to keep much more up to date in my professional capacity. All the article in your Lon Kruger says is actually what I said much earlier in this thread, that sole directors of companies take a minimal salary and receive dividends because its tax efficient to do so, both in terms of PAYE and NI And nobody insinuated anyone was stupid Considering I am the director of an LLC and still know nothing about tax I must be stupid. Thanks for providing no link at all. Since 2016 we have an increase in flat rate VAT payback and a new dividend tax that never existed before. That 7.5% that others are referring to applies to the lower rate group. Thereafter it goes up to 32.5% not an enormous difference to 40%. Then consider as stated before that a salary is an expense to a company whereas a dividend is not. Notably we have more than 3 fold increase to hammer the middle earners (7.5 to 32.5) then the smallest of all increments for the upper earners. There is NO further increment after 38.1 whether you earn 150 thousand or 150 million it's the same. The link you provided confirms that the advice is still to pay small salary plus dividend. The illustration they use on a £60k salary shows a tax difference of £10k better off continuing to use the dividend method . You’re now arguing against yourself. YOU provided that link! " Not me .. I’m just highlighting the post the other guy posted actually confirms it is still better off doing the salary/dividend method  | |||
"https://www.ipse.co.uk/ipse-news/ipse-blog/ltd-co-contractors-covid-support-selfemployed.html "While sole traders can look forward to a potentially substantial grant in around two months’ time, Ltd Co directors will get no such benefit. Instead, the options available to you look thin at the moment – the Coronavirus Business Interruption Loans, the ability to defer or delay some tax payments, possible recourse to Universal Credit, and the ability to effectively ‘furlough’ yourself in order to access 80% of your PAYE earnings through the COVID Job Retention Scheme (we’ve had it on very, very good authority that you can do this, though there is some doubt circulating, and we are seeking clarification)." Do you remember the chancellor saying on TV that he stood behind each and everyone of us? Well that's just a lie. I knew from day 1 I’d get no support. I understand the risks of self employment. But I pay my taxes. I don’t tax dodge in the Cayman Islands etc I pay mine. I’ve applied for universal credit today so I’ll await the outcome of that. I’ve no doubt I’ll not get it The thing is you have received a significant tax reduction by paying yourself in dividends rather than a salary that’s subject to PAYE but unfortunately that’s come back to bite you. You claim that you pay all your taxes but VAT has nothing to do with you, you are just the tax collector and Corporation Tax is the tax on your profits, just as employees pay PAYE upon their taxable salaries. I suspect that once this is all over, the tax benefit of paying dividends over salary will be nullified. There is misconception that LLC directors pay less tax. The fact is that LLC diectors now pay tax on dividends. If you look at those you will see that the tax brackets hammer the average income earner whilst being very lenient on the megga income earners. There is a higher percentage jump from low to middle than there is from low to high. Whilst the HMRC has been demonising contractors saying 90% of them operate outside of the law. However when challenged to provide proof of this claim HMRC were unable to do so. Please do not subscribe to the HMRC propoganda machine. Contracting is a perfectly legal and honest profession. A flexible workforce is a vital part of our economy. Yes contractors get paid more. But they take more risks, get no sick leave or holiday pay or income when there is no work. To kill the entrepreneurial spirit and make us all workers is to keep people with ambition from realizing their true potential. Why don't people conentrate on the true villains. The giant corporations who don't pay their fair share in taxes? There’s no misconception in my post. A sole director of a company that receives his/her remuneration by a mix of salary and dividends will pay less income tax and NIC than if they were paid the same amount purely as salary? That’s the whole point of the exercise. I don’t believe I mentioned contractors! The misconception, a common misconception not your misconception, is that direcors pay themselves dividends and hence less tax. The truth is that the money they earn is taxed 3 times over. Once as a profit (Corporation Tax), twice when it is issued as a dividend, and again as VAT when it is spent. On the other hand people who earn money as a salary have that money taxed twice because when their company pays them it is an expense. The company they work for pays less tax because of their salaries. That’s nonsense. The Company pays Corporation Tax, not the Director. The Director could, if he wished, take all the profits as salary and then there would be no Corporation Tax payable, only the PAYE on salary. The Directors salary is also an expense against the company’s profits and therefore reduces its tax bill just as you cite for employees in other companies. As for VAT, what do you mean when it is ‘spent’? A fully VAT registered company is only a collector of VAT ie it charges VAT on its goods and services and pays VAT on its purchases and either pays or receives the net surplus/deficit to/from the government. Everyone pays VAT when goods are bought in a personal capacity, company directors and Joe Public alike. Company Directors pay themselves in dividends and minimal salary because it’s tax efficient to do so. For no other reason! Any money anyone earns is taxed when they pay VAT. My point is that the same money earned is taxed three times over. Sure a director could take that money as a salary & pay NI. But if you think that a director should then you don't understand the differences between running your own company and having a job. Most of these people who supposedly "don't pay tax" pay more tax than what their accusers earn as a salary. When you look at what they charge it seems like a lot. Then you take off 20% VAT, 20% CT, the money they don't earn when they are poorly, the money they don't earn when they take holiday, the money they don't earn when in between contracts. It's not the gravy train it appears at a glance. I suspect I understand this a lot more than you do. Of course. I'm very very stupid. You're setting the bar low. According to many highly intelligent accountants the main difference between salary vs dividends is NI. But they are also probably stupid. https://www.accountsandlegal.co.uk/tax-advice/are-dividends-still-more-tax-efficient-than-a-large-salary Thank you for providing a link back to 2016. I’m required to keep much more up to date in my professional capacity. All the article in your Lon Kruger says is actually what I said much earlier in this thread, that sole directors of companies take a minimal salary and receive dividends because its tax efficient to do so, both in terms of PAYE and NI And nobody insinuated anyone was stupid Considering I am the director of an LLC and still know nothing about tax I must be stupid. Thanks for providing no link at all. Since 2016 we have an increase in flat rate VAT payback and a new dividend tax that never existed before. That 7.5% that others are referring to applies to the lower rate group. Thereafter it goes up to 32.5% not an enormous difference to 40%. Then consider as stated before that a salary is an expense to a company whereas a dividend is not. Notably we have more than 3 fold increase to hammer the middle earners (7.5 to 32.5) then the smallest of all increments for the upper earners. There is NO further increment after 38.1 whether you earn 150 thousand or 150 million it's the same. The link you provided confirms that the advice is still to pay small salary plus dividend. The illustration they use on a £60k salary shows a tax difference of £10k better off continuing to use the dividend method . You’re now arguing against yourself. YOU provided that link! Not me .. I’m just highlighting the post the other guy posted actually confirms it is still better off doing the salary/dividend method "Apologies, got lost in the length of the post. | |||
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"It taking a dividend some kind of way of dodging tax etc ? I don't really understand it. No it’s a legal way to reduce not dodge tax, but it’s a really bad idea You used to save on tax but the change in laws doesn't make it as beneficial as it used to be as you also pay personal tax @ 7% in any dividends after the 1st £3000 Thanks x Simply put. Pay yourself £719 as as salary and no more than £37 000 in dividends. Even more simply ( and correctly) put, pay your self £12500 in salary and £37500 in dividends"   | |||
" There is misconception that LLC directors pay less tax. The fact is that LLC diectors now pay tax on dividends. If you look at those you will see that the tax brackets hammer the average income earner whilst being very lenient on the megga income earners. There is a higher percentage jump from low to middle than there is from low to high. Whilst the HMRC has been demonising contractors saying 90% of them operate outside of the law. However when challenged to provide proof of this claim HMRC were unable to do so. Please do not subscribe to the HMRC propoganda machine. Contracting is a perfectly legal and honest profession. A flexible workforce is a vital part of our economy. Yes contractors get paid more. But they take more risks, get no sick leave or holiday pay or income when there is no work. To kill the entrepreneurial spirit and make us all workers is to keep people with ambition from realizing their true potential. Why don't people conentrate on the true villains. The giant corporations who don't pay their fair share in taxes?" That’s it in a nutshell. I’m a director of my own Ltd company, my wage has always been a combination of minimum wage (paye) and dividends. I’m a one man band giving a service to various other companies, if I want time off, that service has to continue. So when I take a holiday, that costs me a temporary wage to someone to carry out the work in my absence, same if I’m ill. I get no employer contributions to my pension, no set hours. I pay my corporation tax on time, and collect vat for c&e, I’m vat registered not because I’m over the vat limit, it’s more beneficial to be so, because all my business is with vat registered companies , it doesn’t matter to them that my invoices are plus vat, but I can claim vat back on business expenditures. It’s not easy, but I just prefer having flexibility. The percs of being employed outweigh being in my position. | |||
" There is misconception that LLC directors pay less tax. The fact is that LLC diectors now pay tax on dividends. If you look at those you will see that the tax brackets hammer the average income earner whilst being very lenient on the megga income earners. There is a higher percentage jump from low to middle than there is from low to high. Whilst the HMRC has been demonising contractors saying 90% of them operate outside of the law. However when challenged to provide proof of this claim HMRC were unable to do so. Please do not subscribe to the HMRC propoganda machine. Contracting is a perfectly legal and honest profession. A flexible workforce is a vital part of our economy. Yes contractors get paid more. But they take more risks, get no sick leave or holiday pay or income when there is no work. To kill the entrepreneurial spirit and make us all workers is to keep people with ambition from realizing their true potential. Why don't people conentrate on the true villains. The giant corporations who don't pay their fair share in taxes? That’s it in a nutshell. I’m a director of my own Ltd company, my wage has always been a combination of minimum wage (paye) and dividends. I’m a one man band giving a service to various other companies, if I want time off, that service has to continue. So when I take a holiday, that costs me a temporary wage to someone to carry out the work in my absence, same if I’m ill. I get no employer contributions to my pension, no set hours. I pay my corporation tax on time, and collect vat for c&e, I’m vat registered not because I’m over the vat limit, it’s more beneficial to be so, because all my business is with vat registered companies , it doesn’t matter to them that my invoices are plus vat, but I can claim vat back on business expenditures. It’s not easy, but I just prefer having flexibility. The percs of being employed outweigh being in my position." Very well Written and thank you! I’m the OP on this thread and I am just like you. I provide a professional service to various clients. Only difference is I don’t pay myself a paye salary. I was advice to but I literally never got around to sorting it out. But that’s life. I’m Happy in my current role and have at least 6-8 weeks work in front of me. Hopefully I get over this but we will See! Again thanks x | |||
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"Clever accountants since the year dot have encouraged ways of minimising profit and hence tax. They exploit loopholes to minimise income and Profit. I know it can be done from experience. I know how it's done and can see the huge problem. Luckily I chose to become an employee back in 2007 and boy oh boy am I glad I did now. Ok I have had years and years of no pay rise etc due to crap economy but at least now I have a £ 7.5 K backstop if my workload goes over the cliff. My point is you can't have it both ways, minimising income and tax and then expect it to be as plain sailing as PAYE to sort out these grants. I totally respect your post and only partially disagree. I have worked my whole life for 20 years and 3 of those has been self employed. Whilst self employed i paid my vat bill and corporation tax. I paid my tax up to date all the time. The issue arises on how I pay myself via my limited company. I pay myself on dividends they pay the tax on the dividends. But I’m exempt from help because I chose to pay myself in this method. How is this fair? I’m tax compliant and pay my way all the time. " Thanks for the considered reply and I am not doing it to say oh " self employed people have had it good for many many years." What I am trying to point out is how hard it is for the government to pin point the ones that need it the most as clever accountants use ways to minimize profit. Perhaps this is why the government have targeted profit as the criterion for the benefit of this scheme because they understand this is so. My example without going in to too much detail and when I was self employed builder is that back in 2007 I paid my accountant £ 100/month but the advice they gave me was to go limited and although my fee to them was higher than as sole trader the advice they gave me enable perfectly legal "avoidance", I hasten to add that word and outweighed the monthly fee so it was good business to do it that way. They know all the claims and loop holes. It's what we pay them to do. | |||
