well, it hasn't been repealed yet but at least it made it into the budget that IR35 is to be reviewed by the newly formed office of tax simplification (full details to be released shortly).
Fingers crossed this is now the beginning of the end of the current situation where we effectively have two tiers of limited company.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
As you'll probably know the interim report was published yesterday. I thought you may be interested to read some exclusive comments from the report's author, Kate Cottrell, on why there aren't any easy answers on the IR35 review.
-- Edited by Contractor UK on Friday 11th of March 2011 01:57:07 PM
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Contractor UK
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As in effect tax and NI go into the same pot it makes sense for them to be amalgamated into one figure with one threshold. It would also mean that higher earners would pay more tax because there would not be an upper limit on which NI is not payable. Whilst they're at it they should also look at directors salaries and dividends, closing this loophole would result in a bigger tax take and help with deficit reduction.
NI is a bit of a problem. It is a tax in all but name, but it can be avoided (directors salaries and dividends). It is also not paid on various forms of income, such as pensions, interest and property profits.
More unfair is employers NI - a tax on employment.
Which is why contractors find it so unfair as they are actually paying 20% tax and 23.8% N.I.
I think that the idea of merging the two is quite a dangerous idea for the government as the merging tax and N.I. will just make even more people realise how much that they are actually paying in tax. In fact, add VAT, Petrol duty and Council tax to that and it's a wonder that we have any money at all.
At the end of the day the segregation of taxes is a big con so that people don't notice that all that they really are, are cash cows.
Actually, the current tax system was only put in place as a temporary measure to fund the Napoleonic war. As that's the case maybe we should ask why with all this money that we're paying over there aren't English tanks rolling up the Chanselise rather than French fighters on our aircraft carriers! (lol).
Actually, if we're going to have a tax debate, I am a supporter of the single rather than progressive tax system (after a tax free initial amount for all). That way the more you earn the more you pay (and keep) rather than the current system where one suffers so much for earning more that those who earn in higher bands feel no guilt in finding legal ways to get around the system.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
