Starmergeddon: They Came And Ate Us

[Slick]

Looks like Labour MP Mike Amesbury is fucked. CCTV clearly shows him sucker punching the guy in the street last night and then punching him another 3 or 4 times in the head after he knocks him over. Has to be dragged off by passers by. Amesbury claims he was threatened but the guy he hits never takes his hands out of his pockets.

Yeah, he's not going to be able to talk his way out of this one.

[SaintK]

Looks like Labour MP Mike Amesbury is fucked. CCTV clearly shows him sucker punching the guy in the street last night and then punching him another 3 or 4 times in the head after he knocks him over. Has to be dragged off by passers by. Amesbury claims he was threatened but the guy he hits never takes his hands out of his pockets.

Yeah, he's not going to be able to talk his way out of this one.

Jail time for ABH potentially.

[Biffer]

Just a small point of order - any dividends should have already been through corporation tax for any UK element, so the profits themselves are already taxed and the dividend comes from profit. if the money was earned/generated in the US, corporation taxes should be paid in the US and that element should not be taxed in the UK anyway.

As a small business owner I pay myself a small wage and the rest dividend - by the time it's all worked out and I've paid corporation tax, VAT and my own personal tax bill, it's pretty much the same thing as paying PAYE. The biggest exception is that employer's NI won't be paid to the same extent, although I will change VAT. I'm sure Rushi has a far more sophisticated approach for his fortunes, and takes greater advantage of the byzantine mess.

The question here is why are SME founders / directors advised to pay them selves substantially through dividends rather than salary if there isn't a tax advantage.

In my case, to smooth out what can be a very unpredictable, feast-and-famine income - the business will always receive all income and be taxed at a standard 20% for all profit, but I'll dole the cash out as I need it and not have to pay upper rate if the invoice happens to be paid to the business just before April 5.

Yes, that's tax management, but the tax years are ultimately arbitrary dates that don't always align to contract payment dates.

If you set up as a small business you can of course operate as a sole trader, but if you've any ambition to extend then it really needs to be either a limited partnership (if you're going in with peers) or limited company. The company does the earning, and you get paid from the company, and dividends are what the profit of the company go into. If your company is just disguised employment, where you're using the construct just for tax purposes, you go inside IR35 with your end client and get paid via PAYE anyway.

It used to be more of a wild west, I know people who did all the tricks such as writing off directors loans and closing the company down each year to only pay entrepreneur's tax. They're quite rightly being hammered down on but it still occurs. That should be more the focus of ire.

I don't have a problem with that, I just want to ensure that people pay the same rates of tax as I do on the same earnings. There have been plenty of ways to avoid that in the past. And I want people who have income from assets to be taxed on that in the same way.

Edit - there's obviously a grey area when a company becomes an asset. It becomes less of a grey area if all income is taxed the same way.

[inactionman]

The question here is why are SME founders / directors advised to pay them selves substantially through dividends rather than salary if there isn't a tax advantage.

In my case, to smooth out what can be a very unpredictable, feast-and-famine income - the business will always receive all income and be taxed at a standard 20% for all profit, but I'll dole the cash out as I need it and not have to pay upper rate if the invoice happens to be paid to the business just before April 5.

Yes, that's tax management, but the tax years are ultimately arbitrary dates that don't always align to contract payment dates.

If you set up as a small business you can of course operate as a sole trader, but if you've any ambition to extend then it really needs to be either a limited partnership (if you're going in with peers) or limited company. The company does the earning, and you get paid from the company, and dividends are what the profit of the company go into. If your company is just disguised employment, where you're using the construct just for tax purposes, you go inside IR35 with your end client and get paid via PAYE anyway.

It used to be more of a wild west, I know people who did all the tricks such as writing off directors loans and closing the company down each year to only pay entrepreneur's tax. They're quite rightly being hammered down on but it still occurs. That should be more the focus of ire.

I don't have a problem with that, I just want to ensure that people pay the same rates of tax as I do on the same earnings. There have been plenty of ways to avoid that in the past. And I want people who have income from assets to be taxed on that in the same way.

Edit - there's obviously a grey area when a company becomes an asset. It becomes less of a grey area if all income is taxed the same way.

Yep, there were far too many tax wheezes that were open for far too long.

One thing I would say is that anyone working as a small business owner (particularly as a service provider) in a service provision contract has significantly less in the way of protections and benefits - I've no sick pay, no paternity pay, no holiday pay, no mandatory training (it's on me to pay and make time for) etc. This should be factored in to a day rate, but it should mean a PAYE employee does not get the same takehome as an equivalent self-employed contractor as the contractor is picking up a lot of stuff that the employee gets as part of their package.

I mention this only in the context of service provision contracts, as HMRC is determined to get a lot of small business-employed contractors inside IR35, to tax them and gather NICs as employees whilst doing pretty much nothing to ensure that the same standards of benefit and support are offered. They can't have it both ways.

[Paddington Bear]

Not entirely sure it is fair to see a business owner’s drawing as being identical to my salary - I have far greater security and perks as an employee

[Blackmac]

Looks like Labour MP Mike Amesbury is fucked. CCTV clearly shows him sucker punching the guy in the street last night and then punching him another 3 or 4 times in the head after he knocks him over. Has to be dragged off by passers by. Amesbury claims he was threatened but the guy he hits never takes his hands out of his pockets.

Yeah, he's not going to be able to talk his way out of this one.

Jail time for ABH potentially.

I would say that from what we see there, no significant injury to the victim and with a person of previously good character, the chances of a custodial would previously have been nil, however the behaviour of the criminal justice system over the past few months has been extraordinary and anything less than a custodial will add an incredible amount of fuel to the two tier justice debate. And rightly so.

[Biffer]

Not entirely sure it is fair to see a business owner’s drawing as being identical to my salary - I have far greater security and perks as an employee

Flip side of that would be a business owner is also making money out of other people's labour, not just their own.

[Paddington Bear]

Not entirely sure it is fair to see a business owner’s drawing as being identical to my salary - I have far greater security and perks as an employee

Flip side of that would be a business owner is also making money out of other people's labour, not just their own.

For which employees such as myself are remunerated and if we don’t like it are free to leave on 1-3 months notice, labour which they also pay tax on through NI contributions. I understand your point that there are loopholes in the system, I think you’re being flippant as to the level of risk the vast majority of business owners are taking, and we shouldn’t assume that they will continue to take them if there isn’t a reasonable path to doing financially better than they would working a 9-5.

[robmatic]

Not entirely sure it is fair to see a business owner’s drawing as being identical to my salary - I have far greater security and perks as an employee

Well, there is definitely a difference in risk but that is generally reflected in the reward.

Things would be a lot simpler if we stopped pretending that NI was anything other than a differently-badged slice of income tax.

[weegie01]

I don't have a problem with that, I just want to ensure that people pay the same rates of tax as I do on the same earnings. There have been plenty of ways to avoid that in the past. And I want people who have income from assets to be taxed on that in the same way.

Edit - there's obviously a grey area when a company becomes an asset. It becomes less of a grey area if all income is taxed the same way.

Putting aside the points already made, in the general cases different forms of income / value transfer are taxed differently as they are generated differently, over different timescales, have different risk profiles etc. The way they are taxed needs to take account of this.

To give an extreme example, we bought some bare land a few years ago and planted trees. There will be no return on that investment for circa 50 years. It would be ludicrous to treat that income as the same as salaried income received in that year. Capital investment can take a long time to generate returns, the investor has not had the use of that money during that period, and the tax levied on the gain has to reflect both that fact and the time taken to generate the return.

There is far less tax avoidance going on than people think. At all levels of income there are those who do their best to avoid tax. These are the ones who get the most publicity, but most people pay their taxes. Married to a tax accountant I know of many people who take the piss. The solution to this is not to throw the baby out with the bath water but to address those particular issues.

One of the biggest issues is frankly HMRC incompetence and under staffing. There are plenty of things going on that they'd spot if they just checked more returns properly. As an example for a long time it was well known that claims for R&D expenses (effectively giving double deductions) were not being checked. A small number of unscrupulous firms took advantage of this and gave advice that was totally incorrect. It got so bad that a delegation went to HMRC to tell them to sort this out as firms who played by the rules were losing business. HMRC were oblivious, and it still took them years to take action.

[weegie01]

Not entirely sure it is fair to see a business owner’s drawing as being identical to my salary - I have far greater security and perks as an employee

Well, there is definitely a difference in risk but that could be reflected in the reward. It can also go catastrophically wrong.

Things would be a lot simpler if we stopped pretending that NI was anything other than a differently-badged slice of income tax.

Fixed that for you.

NI really annoys me. Just incorporate in income tax and get rid of the nonsense that NI combined with tax distorts marginal tax rates. Increase the tax on each income tax band. There are few things more daft than better off people paying less NI.

[vball]

Having just been made redundant at the age of retirement, we are going to invest the redundancy as a nest egg, and will give us about 5% return (inshallah) to supplement our pension. Or should I say my pension as my wife has very little. We have been told that we can "move/transfer/allocate" some of the interest to my wife and therefore pay less tax (as a couple).

I know that is tax avoidance and I could be painted with the same paint as more colourful avoidance characters, but I feel that is not true. We have a good life and hopefully good income, but not massive. I suppose the budget will stuff us for sure.

[Tichtheid]

Having just been made redundant at the age of retirement, we are going to invest the redundancy as a nest egg, and will give us about 5% return (inshallah) to supplement our pension. Or should I say my pension as my wife has very little. We have been told that we can "move/transfer/allocate" some of the interest to my wife and therefore pay less tax (as a couple).

I know that is tax avoidance and I could be painted with the same paint as more colourful avoidance characters, but I feel that is not true. We have a good life and hopefully good income, but not massive. I suppose the budget will stuff us for sure.

I think there is a big difference between tax avoidance, especially at the personal level, and tax evasion, especially at the corporate level. Personally I have no complaints with people acting legally. I used to claim fuel and tools etc against tax when I was self-employed in France.

I do have a problem with huge multinational corporation making huge profits and not paying their dues in the country they make their profits in

[vball]

Having just been made redundant at the age of retirement, we are going to invest the redundancy as a nest egg, and will give us about 5% return (inshallah) to supplement our pension. Or should I say my pension as my wife has very little. We have been told that we can "move/transfer/allocate" some of the interest to my wife and therefore pay less tax (as a couple).

I know that is tax avoidance and I could be painted with the same paint as more colourful avoidance characters, but I feel that is not true. We have a good life and hopefully good income, but not massive. I suppose the budget will stuff us for sure.

I think there is a big difference between tax avoidance, especially at the personal level, and tax evasion, especially at the corporate level. Personally I have no complaints with people acting legally. I used to claim fuel and tools etc against tax when I was self-employed in France.

I do have a problem with huge multinational corporation making huge profits and not paying their dues in the country they make their profits in

I am with you on that sir.

[Paddington Bear]

Not entirely sure it is fair to see a business owner’s drawing as being identical to my salary - I have far greater security and perks as an employee

Well, there is definitely a difference in risk but that is generally reflected in the reward.

Things would be a lot simpler if we stopped pretending that NI was anything other than a differently-badged slice of income tax.

Yes there is, I’d say that is a good thing - policy should encourage people to set up businesses.

As others have said, any potential reward has to be factored against the fact it can go badly wrong. You have to be quite genuinely criminal as an employee to lose your house as a result of your work, as an extreme example.

[Biffer]

Not entirely sure it is fair to see a business owner’s drawing as being identical to my salary - I have far greater security and perks as an employee

Flip side of that would be a business owner is also making money out of other people's labour, not just their own.

For which employees such as myself are remunerated and if we don’t like it are free to leave on 1-3 months notice, labour which they also pay tax on through NI contributions. I understand your point that there are loopholes in the system, I think you’re being flippant as to the level of risk the vast majority of business owners are taking, and we shouldn’t assume that they will continue to take them if there isn’t a reasonable path to doing financially better than they would working a 9-5.

In turn, you’re ignoring that in return for their taking risk on, they profit from other peoples labour as well as their own. That’s the reward for the risk.

[Biffer]

Having just been made redundant at the age of retirement, we are going to invest the redundancy as a nest egg, and will give us about 5% return (inshallah) to supplement our pension. Or should I say my pension as my wife has very little. We have been told that we can "move/transfer/allocate" some of the interest to my wife and therefore pay less tax (as a couple).

I know that is tax avoidance and I could be painted with the same paint as more colourful avoidance characters, but I feel that is not true. We have a good life and hopefully good income, but not massive. I suppose the budget will stuff us for sure.

I’m ok with that tax allocation, but I don’t see why you should pay less tax on the income you get from that asset than people pay for working.

[Biffer]

Not entirely sure it is fair to see a business owner’s drawing as being identical to my salary - I have far greater security and perks as an employee

Well, there is definitely a difference in risk but that is generally reflected in the reward.

Things would be a lot simpler if we stopped pretending that NI was anything other than a differently-badged slice of income tax.

Indeed, that would deal with a substantial part of my objections. If you have an income from work of thirty grand you’re paying a marginal tax rate of 32%. If you have an income of thirty grand from share dividends the marginal tax rate is 8.75%.

Even allowing for risk involved in investment, that’s not equitable. It’s a biased system towards people who own assets.

[sockwithaticket]

The bus fare cap rise is insane policy and will disproportionately impact lower earners.

[Sandstorm]

The bus fare cap rise is insane policy and will disproportionately impact lower earners.

Indeed. And very surprising from a Labour government.

[Biffer]

The bus fare cap rise is insane policy and will disproportionately impact lower earners.

There was some economic analysis showing that it was returning less than it cost. So it may be felt the money is best spent in another way.

[sockwithaticket]

The bus fare cap rise is insane policy and will disproportionately impact lower earners.

There was some economic analysis showing that it was returning less than it cost. So it may be felt the money is best spent in another way.

That's how public transport works in an awful lot of places. Subsidise it because its a multiplier for the rest of the economy and a contributor to reducing emissions. The latter point is particularly salient when it comes to costs, the more we take out of pockets with public transport the more likely we are to push people into car ownership. If they're spending enough on our crappy bus system a car starts looking like a much, much more attractive option to have a car.

[SaintK]

The bus fare cap rise is insane policy and will disproportionately impact lower earners.

There was some economic analysis showing that it was returning less than it cost. So it may be felt the money is best spent in another way.

.......and the whole thing was due to end in December

[Tichtheid]

The bus fare cap rise is insane policy and will disproportionately impact lower earners.

There was some economic analysis showing that it was returning less than it cost. So it may be felt the money is best spent in another way.

.......and the whole thing was due to end in December

I think the ending of the cap has been pushed back a few times now

[I like neeps]

The problem Starmer has is that in the election campaign he didn't roll out his strategy or vision for government. It's all cuts to services and tax rises here and the payoff is things in five years might be marginally better but we won't articulate how. He has no future vision of Britain sadly. So can't say where even something like this bus pass policy fits in. Greener Britain? No. Supporting with cost of living? No. Just live and die by some treasury spreadsheet as it's in infallible or even in line with the country.

Again not learning the lesson of austerity. The Tories managed to hide their ideological reasons for austerity with "maxing out the credit card" "household budgets" etc etc. So people bought into it. Labour aren't and can't do that because it's all some cost benefit analysis where they won't say the benefits. Complete lack of vision.

All Starmer has is the Tories were bad (they were), we'll be less bad. Won't wash when services aren't improving, the cost of everything is going up, and the government have no captivating messages. People will stop blaming the Tories and start blaming Labour soon.

Get ready for Kemi 2029.

[Biffer]

The bus fare cap rise is insane policy and will disproportionately impact lower earners.

There was some economic analysis showing that it was returning less than it cost. So it may be felt the money is best spent in another way.

That's how public transport works in an awful lot of places. Subsidise it because its a multiplier for the rest of the economy and a contributor to reducing emissions. The latter point is particularly salient when it comes to costs, the more we take out of pockets with public transport the more likely we are to push people into car ownership. If they're spending enough on our crappy bus system a car starts looking like a much, much more attractive option to have a car.

Yeah, but that's the point the analysis was making - it wasn't a multiplier.

[Sandstorm]

The problem Starmer has is that in the election campaign he didn't roll out his strategy or vision for government. It's all cuts to services and tax rises here and the payoff is things in five years might be marginally better but we won't articulate how. He has no future vision of Britain sadly. So can't say where even something like this bus pass policy fits in. Greener Britain? No. Supporting with cost of living? No. Just live and die by some treasury spreadsheet as it's in infallible or even in line with the country.

Again not learning the lesson of austerity. The Tories managed to hide their ideological reasons for austerity with "maxing out the credit card" "household budgets" etc etc. So people bought into it. Labour aren't and can't do that because it's all some cost benefit analysis where they won't say the benefits. Complete lack of vision.

All Starmer has is the Tories were bad (they were), we'll be less bad. Won't wash when services aren't improving, the cost of everything is going up, and the government have no captivating messages. People will stop blaming the Tories and start blaming Labour soon.

Get ready for Kemi 2029.

The Labour Vision by Starmer is Tax and Spend on Public Services (NHS). They just haven't stood up and said it officially yet.

[Rhubarb & Custard]

The increase in revenues, and profits, at the gambling firms these last decades went set alongside such as a 50% increase in the cost of bus fares is nuts. But yet again the vast spend on bribes by the gambling firms has negated an much bigger spend still should they have pay taxes at sensible rate, sensible given their profits and sensible given the damage they wreak on society, instead we get the genius rulings like DMCS aren't even going to look at gaming because why care about 4-5 year olds becoming addicted to gambling, it'll all work out in the wash apparently

[Paddington Bear]

Labour have got so obsessed with the ‘sensibles’ narrative that they’ve conned themselves into having all their spending plans being dependent on sign off from Treasury aligned civil servants

[Rhubarb & Custard]

That is still a big improvement on what was happening mind, with the Tories hiding spending costs and not funding spending pledges. Just Labour are not going to get many thanks or gain votes for such, but it still makes sense to behave like (somewhat) responsible adults

[SaintK]

Get ready for Kemi 2029.

She won't even be leader come 2029

[Paddington Bear]

Flip side of that would be a business owner is also making money out of other people's labour, not just their own.

For which employees such as myself are remunerated and if we don’t like it are free to leave on 1-3 months notice, labour which they also pay tax on through NI contributions. I understand your point that there are loopholes in the system, I think you’re being flippant as to the level of risk the vast majority of business owners are taking, and we shouldn’t assume that they will continue to take them if there isn’t a reasonable path to doing financially better than they would working a 9-5.

In turn, you’re ignoring that in return for their taking risk on, they profit from other peoples labour as well as their own. That’s the reward for the risk.

I don’t really follow - each employee they take on and potentially profit from is also further risk and a financial burden. I expect to get paid at the end of the month even if our clients prefer to pay on 90 day terms. I don’t accept that in *most cases* private sector employment is so exploitative that your analysis holds. People should be encouraged to start businesses and take on employees, that requires incentives that reflect that they run risks most of us run a mile from.

[I like neeps]

Get ready for Kemi 2029.

She won't even be leader come 2029

Effectiveness in opposition is mostly down to how unpopular the current government is.

[Hal Jordan]

The bus fare cap rise is insane policy and will disproportionately impact lower earners.

There was some economic analysis showing that it was returning less than it cost. So it may be felt the money is best spent in another way.

That's how public transport works in an awful lot of places. Subsidise it because its a multiplier for the rest of the economy and a contributor to reducing emissions. The latter point is particularly salient when it comes to costs, the more we take out of pockets with public transport the more likely we are to push people into car ownership. If they're spending enough on our crappy bus system a car starts looking like a much, much more attractive option to have a car.

Especially as politicians have been absolutely shit scared of increasing fuel duty since 2011 up until the 2p increase coming up to restore it to 7p following Hunt's continuation of the poison pill drop to 5 p.

wAr ON tEh moTOriSt!!!!!!!!!!!!!!!!!!!!!!!!!!!

[inactionman]

For which employees such as myself are remunerated and if we don’t like it are free to leave on 1-3 months notice, labour which they also pay tax on through NI contributions. I understand your point that there are loopholes in the system, I think you’re being flippant as to the level of risk the vast majority of business owners are taking, and we shouldn’t assume that they will continue to take them if there isn’t a reasonable path to doing financially better than they would working a 9-5.

In turn, you’re ignoring that in return for their taking risk on, they profit from other peoples labour as well as their own. That’s the reward for the risk.

I don’t really follow - each employee they take on and potentially profit from is also further risk and a financial burden. I expect to get paid at the end of the month even if our clients prefer to pay on 90 day terms. I don’t accept that in *most cases* private sector employment is so exploitative that your analysis holds. People should be encouraged to start businesses and take on employees, that requires incentives that reflect that they run risks most of us run a mile from.

It's also worth pointing out that the output of a company is not simply the sum of the individual worker's sweat and effort.

As an example, I'm sure many others in a similar boat to me dread the 'winning work' part - which is generally not directly recompensed (and tends to be the most soul-destroying part) it is utterly critical.

[SaintK]

Get ready for Kemi 2029.

She won't even be leader come 2029

Effectiveness in opposition is mostly down to how unpopular the current government is.

She will not be effective, she's far too prickly, thin skinned and down right aggressive to last the course.
Listening to her losing her cool on Times radio this morning when things she had recently said were quoted back to her was very instructive as to her character flaws.

[Paddington Bear]

In turn, you’re ignoring that in return for their taking risk on, they profit from other peoples labour as well as their own. That’s the reward for the risk.

I don’t really follow - each employee they take on and potentially profit from is also further risk and a financial burden. I expect to get paid at the end of the month even if our clients prefer to pay on 90 day terms. I don’t accept that in *most cases* private sector employment is so exploitative that your analysis holds. People should be encouraged to start businesses and take on employees, that requires incentives that reflect that they run risks most of us run a mile from.

It's also worth pointing out that the output of a company is not simply the sum of the individual worker's sweat and effort.

As an example, I'm sure many others in a similar boat to me dread the 'winning work' part - which is generally not directly recompensed (and tends to be the most soul-destroying part) it is utterly critical.

Absolutely.

The bit that springs to mind for me atm is cash flow. I’ve done about £20,000 of work for a client who is refusing to pay. As an employee I sent a few chasers, escalated it to credit control and close my laptop at 5:30/6 and think about other things. I dare say if you run a business this sort of thing keeps you up at night.

[Biffer]

For which employees such as myself are remunerated and if we don’t like it are free to leave on 1-3 months notice, labour which they also pay tax on through NI contributions. I understand your point that there are loopholes in the system, I think you’re being flippant as to the level of risk the vast majority of business owners are taking, and we shouldn’t assume that they will continue to take them if there isn’t a reasonable path to doing financially better than they would working a 9-5.

In turn, you’re ignoring that in return for their taking risk on, they profit from other peoples labour as well as their own. That’s the reward for the risk.

I don’t really follow - each employee they take on and potentially profit from is also further risk and a financial burden. I expect to get paid at the end of the month even if our clients prefer to pay on 90 day terms. I don’t accept that in *most cases* private sector employment is so exploitative that your analysis holds. People should be encouraged to start businesses and take on employees, that requires incentives that reflect that they run risks most of us run a mile from.

I didn't say anything about exploitation.

Are you only taking on risk when you take on an additional employee? If that's the case what's the motivation? If it's not increasing turnover and profit, why would you take them on? Just for the risk? Of course not. You take on extra risk to make extra profit. You make more money than you could on your own by taking on that extra risk. That's the reward for your risk taking.

[epwc]

You make more money than you could on your own by taking on that extra risk. That's the reward for your risk taking.

That's basically the long and short of it. I hate employing people, but I know that I can't do what I need to without them, so the reward for dealing with staff (in my own case) is being able to get to a scale where the business is sustainable

[Slick]

For which employees such as myself are remunerated and if we don’t like it are free to leave on 1-3 months notice, labour which they also pay tax on through NI contributions. I understand your point that there are loopholes in the system, I think you’re being flippant as to the level of risk the vast majority of business owners are taking, and we shouldn’t assume that they will continue to take them if there isn’t a reasonable path to doing financially better than they would working a 9-5.

In turn, you’re ignoring that in return for their taking risk on, they profit from other peoples labour as well as their own. That’s the reward for the risk.

I don’t really follow - each employee they take on and potentially profit from is also further risk and a financial burden. I expect to get paid at the end of the month even if our clients prefer to pay on 90 day terms. I don’t accept that in *most cases* private sector employment is so exploitative that your analysis holds. People should be encouraged to start businesses and take on employees, that requires incentives that reflect that they run risks most of us run a mile from.

I took on my first full time employee recently, it's so fucking expensive.