According to the Tax Payers Alliance, a single tax rate of 30% would make the tax system much easier, which would mean scraping National Insurance.
The controversal part of the article states that Limited Companies would be taxed on Dividends taken and not net profits. if this were the case would this remove the tax efficiencies of using a Limited Company or would there be a lower rate for small limited companies. What does everybody think?
IMO the Taxpayers Alliance and business representatives normally talk sense but policy rarely follows common sense. Policy is made by politicians sensitive to the electorate. For instance, Tax Credits were envisioned as PAYE in reverse as it was supposed that the infrastructure was already there to implement them. The Inland Revenue couldn't handle reverse PAYE so we ended up with a heavily abused parellel tax/benefits assessment monster.
Merging N.I. and Income Tax has been in many people's wish list for twenty years but it looks like the smallest employers are going to be burdened with Real Time reporting of these deductions without any move at all in simplification.
Sky use the phrase 'under the plans' as if the T.A. and IofD are responsible for policy and this leads me to take their whole report with a pinch of salt. The report seems strange and IMO loses further credibility when they talk about a £10,000 personal allowance -- a level which we are due to get in a couple of years anyway.
Is there still much of a limited liability benefit? Most people seem to want personal guarantees before supplying goods or services on credit in my experience.
It's in the best interests of the country for entrepreneurs to be rewarded with lower taxation than everyone else and protected by limited liability. A lot of them are set up purely to avoid N.I. Hardly surprising when Class 4 and Employers N.I. keeps being increased.
We're just getting more and more uncompetitive and this ties in with the discussion about university graduates.
The single tax rate has been bandied for decades and to my mind it's a sound approach.
Scrap the idea of a progressive tax system and charge a single rate accross the board so the more that you earn the more that you keep creating an incentive to succeed rather than the current system that punishes success.
Such of course will not change anytime soon as there are less voters on the top pay bands than the lower ones and it is the better off who would benefit from any change of this nature. And of course, the only thing that matters to government is votes!
My personal stance is actually along the lines of Milton Friedman in the belief that :
a) there should be a single tax rate to encourage entrepeneurial spirit
b) businesses with shareholders should not, ever, give anything to charity.
On the second point before people start talking about corporate social responsibility remember that the money that directors give to charity is not theirs to give. It belongs to the shareholders so to distribute the money is equivalent to stealing it to give away as the directors see fit.
If the shareholders want to give to charity then it is their option to donate their money to the charity that they choose, not the one that panders to the directors ego or his wifes pet project. Basically it is not for companies to effectively tax the shareholders and distribute their profits as the company see's fit.
A little off topic there but it all relates to the same Friedman theories which have a lot of merit.
Shaun.
p.s. My business model is a limited company and I don't take dividends. Adoption of flat rate tax regime would not change my business model.
p.s.2 The Friedman flat rate tax theory is from 1962 (and is based on theories much older than that) so not exactly breaking news for sky there!!!
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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.
Such of course will not change anytime soon as there are less voters on the top pay bands than the lower ones and it is the better off who would benefit from any change of this nature. And of course, the only thing that matters to government is votes!
I agree with a lot of what you say, however, if you educated the lower earners on the fact that they would be 2.5% or thereabouts better off then they would go for it.
My problem is putting sales tax in the hands of the local governments as is being proposed, it's unquantifiable.
Oh God, didn't read that bit... I wouldn't trust many local governments with sharp objects let alone sales tax!
Just look how many of them pleaded povety whilst investing huge surpluses in icelandic banks. If the banks hadn't gone belly up none of us would have ever known about these investments.... And on that matter. Why weren't we all down the council offices with pitchforkes and burning torches demanding to know why council tax kept going up if they could aford to hive off millions in investments?
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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.
Is there still much of a limited liability benefit? Most people seem to want personal guarantees before supplying goods or services on credit in my experience.
I agree there are still times when liability is limited. Personally I find it sad to think that people are setting up with the thought in mind that if it all goes wrong they can get away without paying someone, even the tax man.
I agree there are still times when liability is limited. Personally I find it sad to think that people are setting up with the thought in mind that if it all goes wrong they can get away without paying someone, even the tax man.
Kris
Sounds like a Glasgow company that was set up on the 27th May 1899.
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Never buy black socks from a normal shop. They shaft you every time.
