Politics Today

[Alistair20000]

The world has been very fair to some, like Mone and Barrowman. Companies registered offshore on the British Crown's Isle of Man pay 0% Corporation Tax and 0% tax on dividend payments.

Those companies pay UK Corporation tax on their UK source income

 

[angelic upstart]

Since when was the World ever fair ?

BTW: Tax on dividends is not a lot different from tax and NIC on earned income.

Only 8k difference on 40k.

It's up to people to make it fair? Why should the wealth creators pay all the tax?

 

[Alistair20000]

Only 8k difference on 40k.

It's up to people to make it fair? Why should the wealth creators pay all the tax?

Workings please

 

[angelic upstart]

Workings please

But of course. The calculator is found here - https://www.itcontracting.com/calculators/dividend-tax-calculator-2021-22/#:~:text=The dividend tax rates for,See the table below.

Edit - I just chucked in 40k in the salary section and then in the dividends section.
Extras are able to be gamed by fiddling with those figures.

 

[Alistair20000]

But of course. The calculator is found here - https://www.itcontracting.com/calculators/dividend-tax-calculator-2021-22/#:~:text=The dividend tax rates for,See the table below.

Edit - I just chucked in 40k in the salary section and then in the dividends section.
Extras are able to be gamed by fiddling with those figures.

What that calculation tool fails to take into account is the Corporation tax already paid before paying the dividend.

 

[angelic upstart]

What that calculation tool fails to take into account is the Corporation tax already paid before paying the dividend.

My understanding was (I'm likely wrong) if you're a sole trader you wouldn't pay corp tax?

As a follow on, my understanding (again I'm likely to be wrong) it's partially the reason piles of builders are going "bust" but only owing money to HMRC and for their covid loans. That way they can start up a new firm in their mrs' name next week and carry on earning but avoid a bit of tax and a phat covid loan repayment which paid for the extension, part of the A3 and the pub in the garden.

 

[Alistair20000]

My understanding was (I'm likely wrong) if you're a sole trader you wouldn't pay corp tax?

If you are a sole trader you don't have dividends for your own work. You pay Income Tax and Class 4 NIC on your profits plus Class 2 NIC.

If you work through a limited company you pay Employer's and Employee's NIC on your salary but probably very little as you take a small salary to avoid these. But you pay dividend tax on your dividends after the company has paid Corporation Tax on the business profits. The dividends are not deductible in working out the business profit.

 

[angelic upstart]

If you are a sole trader you don't have dividends for your own work. You pay Income Tax and Class 4 NIC on your profits plus Class 2 NIC.

If you work through a limited company you pay Employer's and Employee's NIC on your salary but probably very little as you take a small salary to avoid these. But you pay dividend tax on your dividends after the company has paid Corporation Tax on the business profits. The dividends are not deductible in working out the business profit.

Understood!

So 19% of the 40k (in this imaginary instance) or just under 8k would be paid in corp tax making it ever so slightly under the paye tax payer.

 

[Alistair20000]

Understood!

So 19% of the 40k (in this imaginary instance) or just under 8k would be paid in corp tax making it ever so slightly under the paye tax payer.

The saving for an owner/worker company is more or less not paying Employer’s NIC.

 

[Egg]

Those companies pay UK Corporation tax on their UK source income

In theory at least.

There are also questions about tax. PPE Medpro said it created a UK division to pay UK tax because it was “the right thing to do”. In Companies House filings, PPE Medpro recorded less than £4m in profit and stated it had only £900,000 in UK tax to pay. But questions remain about at least £65m in profits distributed offshore in the Isle of Man. Asked about PPE Medpro’s apparent offshore profits in February, Page replied: “You again raise the issue of some profit being booked offshore. I remind you that this does not make any such profit unlawful or improper.”

That may be so, but the large offshore distribution of PPE Medpro profits raises moral and practical questions. Was UK tax paid on the full profits of a deal with the UK government to supply PPE to protect NHS workers in the pandemic? And with so much money now offshore, how will PPE Medpro repay the DHSC if a court rules that it needs to return some or all of the £122m it received for unused gowns?

From: https://www.theguardian.com/uk-news/2022/dec/09/revealed-the-full-inside-story-of-the-michelle-mone-ppe-scandal