Small company taxation in the UK is unfair.
It provides unreasonable advantages on occasion.
It is open to abuse as recent experience shows.
It is too commonly used to shift income to people who have not earned the earnings attributed to them.
I tried to deal with all these issues in a paper I wrote in 2007. The issue has not gone away, and the ideas remain as relevant as ever.
That paper is linked to here. For those wanting real tax reform to address the economic needs of the twenty first century this is one to read.
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Are proceeds from your book (or any other income) going into a company and if so is this unfair too?
No, none at all is going to a company. My income is currently all taxed directly on me.
But if it was I have always been genuinely self employed despite all the stupid comments those on the right like to make. So it would be entirely tax compliant if it did go to a company
Would agree on the tax element of your argument. But I would argue that in some of the circumstances small companies should get favourable tax and NI treatment. Small companies do not have guaranteed work, do not enjoy employee rights, can be “dismissed” overnight, have no holiday pay, only receive SSP when sick, etc. They have more legal requirements than sole traders. And I could go on.
I can confidently tell you that if these companies were taxed more then the tax take would fall dramatically, because, for example, the professional contarctors I know are more than smart enough to reduce their reported earnings and inflate their expenses.As an Accountant
I am entirely dependent on what a small company gives me, there is no audit. And in this regard it is even worse for a sole trader.who can keep even less records.
The real problem has for some time been that some of these companies are quasi employees. Their employers save a bundle by hiring them as independent contractors.
On the other hand if not hired as independent contractors then these companies might not get work at all, or at significantly reduced rates.
So, it’s not all about tax in isloation.
Entirely agreed
I have no problem with people being taxed differently when in self employment – dammit – I’ve proposed it!
I do have a problem with people who aren’t self employed abusing the system
And evcen more I have a problem with people just not paying their tax at all and with a government that ignores that fact