Next budget: the ‘self employed’

straightatthewall

Well-known member
We all know that big businesses like Amazon need to pay more tax, but what about all those individuals who are working as self employed and getting away with paying a fraction of the income tax paid by those in PAYE.

We all know it’s a massive piss take and now the country is massively in debt, it needs to change.
 
We all know that big businesses like Amazon need to pay more tax, but what about all those individuals who are working as self employed and getting away with paying a fraction of the income tax paid by those in PAYE.

We all know it’s a massive piss take and now the country is massively in debt, it needs to change.
You want to try working for yourself, it’s tough 👍
 
You want to try working for yourself, it’s tough 👍
No issue with the real self-employed; those who properly run a business and employ others. It's the ones who are basically contractors being 'hired' by larger employers, but get all the tax benefits of being self-employed. Yes, PAYE workers get other benefits, but i'm not sure they outweigh or balance up the massive disparity on income tax.
 
No issue with the real self-employed; those who properly run a business and employ others. It's the ones who are basically contractors being 'hired' by larger employers, but get all the tax benefits of being self-employed. Yes, PAYE workers get other benefits, but i'm not sure they outweigh or balance up the massive disparity on income tax.
That has already been addressed and comes into force this April.

The legislation is called IR35.
 
No issue with the real self-employed; those who properly run a business and employ others. It's the ones who are basically contractors being 'hired' by larger employers, but get all the tax benefits of being self-employed. Yes, PAYE workers get other benefits, but i'm not sure they outweigh or balance up the massive disparity on income tax.
The accountancy changes brought in 4 or 5 years ago IR20 makes it pretty difficult for “one man” contractors to take advantage of tax rules - they are now no better off than Paye.
Also R&D tax credits can now only be really based on salaries paid by companies to gain maximum benefit (for SME and start ups) so the rouse of using contractors is less attractive.
The gap is still cash in hand operatives. These are the people that the government can’t really clamp down on without having a large investigation team. So if you pay your plumber cash, they struggle to tax it in reality.

There aren’t so many loopholes any more for self employed, small business or contractors. The ones that “get away with it” are online companies and the huge multinationals that set their own tariffs in effect
 
The accountancy changes brought in 4 or 5 years ago IR20 makes it pretty difficult for “one man” contractors to take advantage of tax rules - they are now no better off than Paye.
Also R&D tax credits can now only be really based on salaries paid by companies to gain maximum benefit (for SME and start ups) so the rouse of using contractors is less attractive.
The gap is still cash in hand operatives. These are the people that the government can’t really clamp down on without having a large investigation team. So if you pay your plumber cash, they struggle to tax it in reality.

There aren’t so many loopholes any more for self employed, small business or contractors. The ones that “get away with it” are online companies and the huge multinationals that set their own tariffs in effect
One man contractors have still been getting away with it, but it did get tightened up a few years ago.

If they were not getting away with it then the strength of the new IR35 legislation wouldn’t have been needed.

I do agree with your comments on cash in hand.
 
I was a one man contractor for seven years but always paid the correct tax, however I know loads who took the piss. I would imagine the IR35 will start to close all the cheeky loopholes used but it will take time.
 
One man contractors have still been getting away with it, but it did get tightened up a few years ago.

If they were not getting away with it then the strength of the new IR35 legislation wouldn’t have been needed.

I do agree with your comments on cash in hand.
Agreed
 
One man contractors have still been getting away with it, but it did get tightened up a few years ago.

If they were not getting away with it then the strength of the new IR35 legislation wouldn’t have been needed.

I do agree with your comments on cash in hand.

That's how i've seen it one. Good to know that something is being done about it.

Also agree on cash in hand. Some of the Chinese women at the local - cash only - health and relaxation shop, seem to have been able to afford cosmetic augmentation procedures. That's not something I've been able to afford for my other half.
 
That's how i've seen it one. Good to know that something is being done about it.

Also agree on cash in hand. Some of the Chinese women at the local - cash only - health and relaxation shop, seem to have been able to afford cosmetic augmentation procedures. That's not something I've been able to afford for my other half.
Maybe you should work there and offer services then?
 
I was a one man contractor for seven years but always paid the correct tax, however I know loads who took the piss. I would imagine the IR35 will start to close all the cheeky loopholes used but it will take time.
As a matter of interest Scara, did you pay 'the correct tax' within the rules or the real correct tax?

Not casting aspersions with that question or the OP. I'm proud to pay tax as I want to ensure the country gets the services it needs and I don't agree with private companies profiting from services that are essential. I just don't think the current system is fair.
 
It's time to shatter some myths. You are referring to the self employed who have a limited company. The company pays corporation tax at 19% of the company profit, the individual pays personal tax which is generally 7.5% of the dividends taken plus a salary may incur some national insurance. All told the tax bill for those three items is usually between 15-20k I don't receive any holiday pay, sick pay etc. Im not sure why that is deemed taking the piss.....
What I can tell you the likes of Rees Mogg, Sunak and Sir Philip Green are all massively wealthy people won't be affected by these changes, they'll be chuckling at the workers beneath them squabbling between themselves. If being self employed was easy everyone would do it, most people haven't got the minerals.
 
It's time to shatter some myths. You are referring to the self employed who have a limited company. The company pays corporation tax at 19% of the company profit, the individual pays personal tax which is generally 7.5% of the dividends taken plus a salary may incur some national insurance. All told the tax bill for those three items is usually between 15-20k I don't receive any holiday pay, sick pay etc. Im not sure why that is deemed taking the piss.....
What I can tell you the likes of Rees Mogg, Sunak and Sir Philip Green are all massively wealthy people won't be affected by these changes, they'll be chuckling at the workers beneath them squabbling between themselves. If being self employed was easy everyone would do it, most people haven't got the minerals.
+1
 
Ir35 is not aimed at a jobbing about tradesmen like a plumber etc. It’s aimed more at say for example cleaning contractors who always do the same clients. So as they always do the same work their deemed as employed....I think that’s how it works..😁
Can I just say the cash in hand thing works both ways for example you quote for a job say £6k (which would be transferred into your bank and declared) the cust says i’ve got cash and can only afford £5k...?
So assuming you do the job for £5k cash your no better off as the extra£1k would have prob gone in tax, so therefore the public are avoiding tax as well...
 
As a matter of interest Scara, did you pay 'the correct tax' within the rules or the real correct tax?

Not casting aspersions with that question or the OP. I'm proud to pay tax as I want to ensure the country gets the services it needs and I don't agree with private companies profiting from services that are essential. I just don't think the current system is fair.


Straighters

That you don't think the current system is fair does not mean that those operating within the rules are not paying the "real correct tax" ?
 
The self employed create jobs.

Punish them to hard and they will do one.

I did, instead of investing in the UK anymore - I invested elsewhere and created jobs in other countries as I got sick of the tax burden in the UK.

The UKs tax system is seriously wrong and unfair - especially to risk takers.

The UK tax system has multiple tax points for the same money, and that’s wrong in my view.

Which is why I moved too and invested in Singapore, before selling my shares in my business recently - at zero CGT.

Yes we paid Corp tax on profits here, but also zero dividend tax as the view here is that the money has already been taxed.

Tax entrepreneurs / risk takers to much and we just do one - and find a better way.

If you think that’s a good thing for the economy, then you are mistaken.
 
I was a one man contractor for seven years but always paid the correct tax, however I know loads who took the piss. I would imagine the IR35 will start to close all the cheeky loopholes used but it will take time.
i was self employed for 30 years always paid my tax building sites do not like to have you paye as they then become more responsible ie ppe etc they would have to provide tools which can work out very expensive they tried in the 90s to make it compulsory to be cards in if you worked mostly for 1 company but they didnt want it.
the major benefit i had was national insurance paying self empoyed contribution were much cheaper
 
As a matter of interest Scara, did you pay 'the correct tax' within the rules or the real correct tax?

Not casting aspersions with that question or the OP. I'm proud to pay tax as I want to ensure the country gets the services it needs and I don't agree with private companies profiting from services that are essential. I just don't think the current system is fair.
Absolutely, I always asked my accountant to try and be creative, but he wouldn’t have it.
 
We all know that big businesses like Amazon need to pay more tax, but what about all those individuals who are working as self employed and getting away with paying a fraction of the income tax paid by those in PAYE.

We all know it’s a massive piss take and now the country is massively in debt, it needs to change.
Absolutely and they should look at tax in kind too. I've been servicing Mr Jones' old boiler for a long time now and then theres still an hour to kill before I pack up and head home.

Tiffin at 3 every Friday and last week she baked me a new muffin, although she seems to go for the cream horn as it often comes up.

Every one a winner.
 
Taxi drivers got caught out big time as they couldn't claim the covid grants they needed as they've spent years hiding their true incomes. Factamundo

I have no problem with the returns completed by taxi drivers but they can't expect to have it both ways.

Well they can expect whatever they want but they won't get it.
 
Absolutely and they should look at tax in kind too. I've been servicing Mr Jones' old boiler for a long time now and then theres still an hour to kill before I pack up and head home.

Tiffin at 3 every Friday and last week she baked me a new muffin, although she seems to go for the cream horn as it often comes up.

Every one a winner.

You're a wrong un Plumbs.
 
I have no problem with the returns completed by taxi drivers but they can't expect to have it both ways.

Well they can expect whatever they want but they won't get it.
Yep. Don’t think there was any sympathy there, although missing out on furlough schemes for global pandemics won’t be an issue most of the time...
 
Sorry Straighters, I didn't get your point ?
They can't have it both ways - agreed. If you under declared and got bugger all in furlough, then tough luck.
The chances there'll be another situation where legacy declarations dictate government financial support are surely slim. So maybe in the long run it's better to under declare.
 
They can't have it both ways - agreed. If you under declared and got bugger all in furlough, then tough luck.
The chances there'll be another situation where legacy declarations dictate government financial support are surely slim. So maybe in the long run it's better to under declare.

No problemmo Straighters.

Agreed and just misunderstood your original reply.
 
They can't have it both ways -
You mean they only get paid for taking you to the station and not bringing you back?

A bit unfair targeting taxi drivers as it takes years to get the knowledge, and develop a method of communication thats based around 'where to guv?' , 'cor blimey shes got a big set of lungs' and blaming 'ruddy foreigners' for the lack of fresh spuds in Camden Market.
 
You mean they only get paid for taking you to the station and not bringing you back?

A bit unfair targeting taxi drivers as it takes years to get the knowledge, and develop a method of communication thats based around 'where to guv?' , 'cor blimey shes got a big set of lungs' and blaming 'ruddy foreigners' for the lack of fresh spuds in Camden Market.
Or blaming 'ruddy northerners' for the lack of purple sprouting broccoli in Borough Market...
 
Or blaming 'ruddy northerners' for the lack of purple sprouting broccoli in Borough Market...
Must be the smallest queue in that place. I thought the Pearly King clique preferred something more traditional to take home on the DLR.

Nice bit of fish on a rice bed?
 
Yep. Don’t think there was any sympathy there, although missing out on furlough schemes for global pandemics won’t be an issue most of the time...
Just think, if they'd paid taxes for 40 years like me, then they might have had a return. As it happens I havent had any furlough payments either.
 
There are different scenarios. Picture this. I used to work for one of the big power companies, making sure they operated safely. We had a group of about 15 of us, limited by corporate head count. However, there was always too much work for the number of us, due to the head count which was a hard limit.

So the company went out and rehired some of the older generation that had been “retired” a few years earlier. These people had been part of a staff shedding exercise, and had retired at 55. As well as being given a tax-free lump sum redundancy payment they had all their final salary pension pots made up with contributions right up to their official retirement age of 60, and furthermore were allowed to draw their pensions immediately in full with no reduction for early take up. The only restriction was that they had to wait 2 years before being reemployed by their old employer, so they got other highly technical freelance work.

When they were allowed back as contractors after 2 years away, they moved back into our workplace and were paid at higher rates than the employees. Furthermore, they were not PAYE but had the money paid gross into “personal service” companies that they had set up for specifically this one job. They could pay themselves a nominal salary out of this PS company but took most of the cash out as dividends for which they paid minimal tax (16% max).

This was not a secret, in fact some boasted. You can imagine that the regular employees, working alongside and paying full whack PAYE tax and National Insurance were a little pissed off. These contractors were tolerated because they were experts and also nice chaps mostly, ex-colleagues who we respected. And even the trades unions went along with it. Most of us just said “well, they got lucky”. But it caused some staff friction.

It is this kind of thing that IR35 is meant to address. Oh and guess what... now that IR35 has come into play and the aged contractors will all have no other option but to have full tax deducted at source by PAYE, they have all decided to jack it in and retire properly now, to spend more time polishing their new cars. Though the Covid has hampered their extended exotic foreign holiday time.
 
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There are different scenarios. Picture this. I used to work for one of the big power companies, making sure they operated safely. We had a group of about 15 of us, limited by corporate head count. However, there was always too much work for the number of us, due to the head count which was a hard limit.

So the company went out and rehired some of the older generation that had been “retired” a few years earlier. These people had been part of a staff shedding exercise, and had retired at 55. As well as being given a tax-free lump sum redundancy payment they had all their final salary pension pots made up with contributions right up to their official retirement age of 60, and furthermore were allowed to draw their pensions immediately in full with no reduction for early take up. The only restriction was that they had to wait 2 years before being reemployed by their old employer, so they got other highly technical freelance work.

When they were allowed back as contractors after 2 years away, they moved back into our workplace and were paid at higher rates than the employees. Furthermore, they were not PAYE but had the money paid gross into “personal service” companies that they had set up for specifically this one job. They could pay themselves a nominal salary out of this PS company but took most of the cash out as dividends for which they paid minimal tax (16% max).

This was not a secret, in fact some boasted. You can imagine that the regular employees, working alongside and paying full whack PAYE tax and National Insurance were a little pissed off. These contractors were tolerated because they were experts and also nice chaps mostly who we respected. And even the trades unions went along with it. Most of us just said “well, they got lucky”. But it caused some staff friction.

It is this kind of thing that IR35 is meant to address. Oh and guess what... now that IR35 has come into play and the aged contractors will all have no other option but to be PAYE employees, they have all decided to jack it in and retire properly now, to spend more time polishing their new cars. Though the Covid has hampered their extended exotic foreign holiday time.
....and now the power company don’t have enough safety employees, and the government get no tax from the people who just quit.

It is just another example of how increased taxes actually reduces exchequer revenue - and in this case maybe even safety!!
 
....and now the power company don’t have enough safety employees, and the government get no tax from the people who just quit.

It is just another example of how increased taxes actually reduces exchequer revenue - and in this case maybe even safety!!
It also hampers the potential rate of growth for a business, thereby limiting tax revenue over the longer term.

The trouble is that people can only manage 1+1=2, where tax revenue is concerned. So they can’t grasp the concept that lower tax might actually generate more revenue.
 
....and now the power company don’t have enough safety employees, and the government get no tax from the people who just quit.

It is just another example of how increased taxes actually reduces exchequer revenue - and in this case maybe even safety!!
Surely in that scenario, what was hampering the business was adhering to an arbitrary 15 limit. Increase the headcount and get the work done cheaper.
 
Should increase the tax contributions for the big supermarkets for me the only businesses that have done well for the last 12 months while other much smaller businesses have all suffered many never to reopen ever again.
It’ll be a piss take when they announce their yearly profits to the shareholders. 🤬
 
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Surely in that scenario, what was hampering the business was adhering to an arbitrary 15 limit. Increase the headcount and get the work done cheaper.
Maybe, but that’s not the point here.

The tax rises made them quit - whether the business should have done something else is another story.

Business doesn’t always make sense, the CEO could (not saying he did) have announced that they had a head count freeze and the markets could have responded favourably.

Therefore if they are seen to hire permanently it could be said he lied.

This goes on ALL the time!!!

You never really know what is going on behind the scenes.
 
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