Follow-up tax poll
Jul. 25th, 2012 09:38 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
philmophlegmFollowing on from yesterday's poll...
You decide to shop around the next time you need some gardening doing, and this time you choose a different gardener, Adam, who does a good job. This gardener does not ask you to pay him cash-in-hand, but instead his company (Adam the Gardener Limited) sends you an invoice. Since the company is VAT-registered, the fee includes VAT at 20%.
Adam the Gardener Limited has one full-time employee (Adam himself) plus his wife (a rich lawyer) who works part-time for the company (without salary), and owns a small share of the business. Adam and his wife are the two directors of the company, and his wife also acts as company secretary. The company pays Adam a small salary (equal to his personal allowance for Income Tax and less than the threshold at which he and the company would have to pay National Insurance* payments). The company has lots of clients locally and is profitable. It pays Corporation Tax at the small companies rate, and pays most of its profits to its two shareholders in the form of dividends. Adam has no other income other than his salary and dividends from the company. His wife's main income is her law firm salary, which is enough to make her a higher (but not top) rate taxpayer.
* Note for non-UK readers: National Insurance is essentially an additional income tax on employees and a tax on jobs for employers.
[Poll #1856110]
You decide to shop around the next time you need some gardening doing, and this time you choose a different gardener, Adam, who does a good job. This gardener does not ask you to pay him cash-in-hand, but instead his company (Adam the Gardener Limited) sends you an invoice. Since the company is VAT-registered, the fee includes VAT at 20%.
Adam the Gardener Limited has one full-time employee (Adam himself) plus his wife (a rich lawyer) who works part-time for the company (without salary), and owns a small share of the business. Adam and his wife are the two directors of the company, and his wife also acts as company secretary. The company pays Adam a small salary (equal to his personal allowance for Income Tax and less than the threshold at which he and the company would have to pay National Insurance* payments). The company has lots of clients locally and is profitable. It pays Corporation Tax at the small companies rate, and pays most of its profits to its two shareholders in the form of dividends. Adam has no other income other than his salary and dividends from the company. His wife's main income is her law firm salary, which is enough to make her a higher (but not top) rate taxpayer.
* Note for non-UK readers: National Insurance is essentially an additional income tax on employees and a tax on jobs for employers.
[Poll #1856110]
no subject
Date: 2012-07-25 04:51 pm (UTC)