Draft Finance Bill 2016 - Corporation Tax, Income Tax and Capital Gains Tax: Company Distributions
Posted on January 13, 2016 by Jeremy Frost - Insolvency Practitioner
The latest changes to the treatment of capital and income is our Government's latest and, from their perspective obvious attempt to cut the burgeoning one man consultancy businesses down to size.
And on the face of it, it makes perfect sense. If you look like an employee, effectively take the same risks as an employee (ie none) then why should you benefit from a tax rate of 10% as opposed to 40%.
This is an over-simplification, but I remain concerned about a number of things:-
- There is now an entire industry focused on this community, which by definition is cash rich and used to taking professional advice. They are dynamic and fast moving. The archetypal child of Margaret Thatcher. So just how long will it be before products come to market which get us back to where we were. I suspect not long.
- The corollary of this is the small business to which the 10% rate was designed. They are generally under capitalised family orientated businesses. They are not naturally advice takers and are so often where the buck stops. And for this change happens slowly and deliberately.
I'll let you choose....