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21/01/18 21:28
The Many Thresholds of Tax
A client recently asked me a straight forward question. "At what income do I, as a self employed person, start to pay tax?" he said.
You would think, in our era of tech, travel and twitter, that there would a clear unambiguous answer. We have had an Office for Tax Simplification for at least 10 years, but it has made no progress.......
My client's eyes glazed over as I began to list;
1. Above £6,025 pa, you will pay Class II NIC if you are under 65. A fixed sum of £145.
2. Above £8,164 pa, you will pay Class IV NIC if you are under 65, at a chunky 9% of your profits.
3. Above £11,850 pa, you will pay Income Tax irrespective of age at a rate of 20% of your profits.
So, that is in effect 29% for the under 65s - almost one third of your income! That is the starting rate!
Heaven forbid that you might work hard and develop a successful business, because amongst other things, you will pay 40%! income tax above profits of £46,350, and make another £3,650 and you will have your Child Benefit forfeited....
Yet I hear members of the audience on BBC Question Time say that they would gladly pay more tax! I believe this is not sincere. I have never met such a person in real life, and the moral of my story is clear. Our tax system already punishes your ambition and success. We do not need any more.
However, you have a right to manage your tax affairs within the law to your best advantage. Please do so, and contact me and my team to protect your rights and the maximum rewards of your hard work.
Written by:
Norman Elliott FCA
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