If you run your business through a company, the Summer 2015 Budget is BAD NEWS

[TalkinPeace]

Start planning now to rejig

• dividends
• the removal of the ERS NI allowance
• HMRC gunning IR35 at all small companies again.

Thanks George.

HMRC hate people that are one man bands operating as businesses, mainly because it's for (legitimate ) tax avoidance. They've been wanting to crack down for ages. Far easier to go after little people that cannot afford legal representation than big businesses and their huge legal teams.

Yup - it is pretty crap (I've just posted in freelance). I thought that at one time the government wanted to encourage people to incorporate.

I'm wondering whether it's time to close down Ltd Co and revert to self-employed?

I'll be watching the threads on UKBF - the bods there are stars at crunching the numbers.
I still suspect that being able to spread income across years will have its uses

Talkin - i thought he increased the employers NI allowance to £3K?

Yes, but to get the full benefit of that you have to pay out £28k in salaries
AND
it looks like they want to stop it going to companies where the only employees are the directors and their family

Thanks talk

I still have to read the detail in full

Chablis
We are all waiting for the full publication of the bill at the end of the summer because the documents currently available are contradictory.

I did some number crunching and I am still better off operating as a limited company even with the changes (which see me £8k worse off). I will be giving DH a shareholding though.

Ah - had a quick read through the budget docs

It really is an attack on IR35 companies isnt it?

In this case, would it not be better to take a salary upto the NIC level and extract via dividends even with the changes?

Me too. Salary just below NIC threshold, rest in dividends with DH becoming a shareholder so that he can take advantage of the dividend tax allowance and reduce "my" loss.

I'm also waiting for some confirmation about Pension changes and will then be hiring a junior web designer (he's in year 10) and a junior social media manager (she's in year 12) for a nominal salary every month

Lol! Talkin - are they Easy enough to pay?

And isn't that what Jeremy vine done with his little girl being a director of his company?

Making kids directors is a bit daft.
My assistants are the house experts on those topics and will thus be used as such.
HMRC take a very dim view of spurious wages, but I'm reading up ....

As I understand it, HMRC is likely to tax this at the parent's rate anyway unless you can demonstrate real work and real value.

As I also understand it they are not as interested in family members as shareholders receiving dividends. That might be a safer route (although not one I could explore as a lawyer - all owners have to be lawyers and the DSs at 10 and 8 are not quite there yet!!). If the payment is anything significant, a trust (through which school fees etc are paid) would be worth considering.

I'm not a tax expert by any means by the way but we did look at various options.

atticus
I genuinely do get my teens to do databases and social media as they are MUCH better at it than I am - I'd have to pay an outsider if I did not use them.

But yes, shareholding may be the other route : am holding fire till the actual legislation comes out next month
AND
waiting to see how much backtracking takes place in March