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I do, pretty much. I'm a freelancer with my own limited company. I could pay myself pretty much entirely from dividends (=lower tax rate) rather than wages subj

I do, pretty much. I'm a freelancer with my own limited company. I could pay myself pretty much entirely from dividends (=lower tax rate) rather than wages subject to income tax. Many people do. Instead, I pay myself a living wage with standard PAYE income tax/National Insurance, and only use the dividend if I've made a profit in the year. Am I minimising my tax bill? No. But being a decent human being who contributes to a civilsed society is more important to me. Some of us actually believe in this "don't be evil" stuff.

benashford 11y ago
How's that different from any other freelancer? They all pay themselves a salary until they get to the higher income tax bands, then they pay a dividend. That's the most tax efficient way of doing it usually due to the presence of the personal allowance on income.
tonyedgecombe 11y ago
The government will then spend that money on dropping bombs on people in Iraq and Syria, propping up the housing market with dubious schemes and helping already wealthy pensioners. You might be better optimising your affairs for lower tax, then spending the money you gained on something more ethical.
- Doctor_Fegg 11y ago
  I wouldn't disagree on the specifics, but in the round I believe in a tax-funded government. Our county council is closing children's centres, removing rural bus subsidies, cutting back education support, and a thousand other cuts. The more people that avoid tax, the more cuts there'll be.
  - luxpir 11y ago
    The tax receipts from individuals are a tiny fraction of those paid/due from large entities. The cuts are not due to individual tax dodgers, they are politically motivated.
  - tonyedgecombe 11y ago
    In general Tory governments cut taxes, Labour increase them. As we swing back and forwards between parties the tax take oscillates backwards and forwards. This is all about political ideology rather than the actual budget.
pyvpx 11y ago
ahh but you can't pay yourself entirely from dividends. at least, if you are speaking form the standpoint of a US citizen/tax payer. there is a vague but very well litigated stipulation that your wages must be "fair" and commensurate with the work you do for the corporate entity you own. if not, they'll just say your dividends were wages and you owe back taxes + interest and penalties.
- Doctor_Fegg 11y ago
  I'm in the UK (hence the reference to National Insurance). The (roughly) equivalent legislation here is IR35 [1]. But it's not too onerous and there are plenty of people who successfully pay fairly minimal tax while complying with IR35. [1] https://www.gov.uk/guidance/ir35-find-out-if-it-applies https://www.gov.uk/guidance/ir35-find-out-if-it-applies
- gsnedders 11y ago
  In the UK you pretty much can pay yourself entirely in dividends. What many people do is pay themselves over the National Insurance threshold (£8064, which nowadays essentially matters only for being able to claim a state pension eventually) but below the personal allowance (£10600, below which you don't pay any income tax), and then the remainder in dividends. Note as of the 2015 UK Budget the law relating to dividends has changed which makes the tax due far closer, and that comes into effect for the 2016/2017 tax year.

benashford 11y ago

How's that different from any other freelancer? They all pay themselves a salary until they get to the higher income tax bands, then they pay a dividend. That's the most tax efficient way of doing it usually due to the presence of the personal allowance on income.

tonyedgecombe 11y ago

The government will then spend that money on dropping bombs on people in Iraq and Syria, propping up the housing market with dubious schemes and helping already wealthy pensioners. You might be better optimising your affairs for lower tax, then spending the money you gained on something more ethical.

Doctor_Fegg 11y ago
I wouldn't disagree on the specifics, but in the round I believe in a tax-funded government. Our county council is closing children's centres, removing rural bus subsidies, cutting back education support, and a thousand other cuts. The more people that avoid tax, the more cuts there'll be.
- luxpir 11y ago
  The tax receipts from individuals are a tiny fraction of those paid/due from large entities. The cuts are not due to individual tax dodgers, they are politically motivated.
- tonyedgecombe 11y ago
  In general Tory governments cut taxes, Labour increase them. As we swing back and forwards between parties the tax take oscillates backwards and forwards. This is all about political ideology rather than the actual budget.

pyvpx 11y ago

ahh but you can't pay yourself entirely from dividends. at least, if you are speaking form the standpoint of a US citizen/tax payer. there is a vague but very well litigated stipulation that your wages must be "fair" and commensurate with the work you do for the corporate entity you own. if not, they'll just say your dividends were wages and you owe back taxes + interest and penalties.

Doctor_Fegg 11y ago
I'm in the UK (hence the reference to National Insurance). The (roughly) equivalent legislation here is IR35 [1]. But it's not too onerous and there are plenty of people who successfully pay fairly minimal tax while complying with IR35. [1] https://www.gov.uk/guidance/ir35-find-out-if-it-applies https://www.gov.uk/guidance/ir35-find-out-if-it-applies
gsnedders 11y ago
In the UK you pretty much can pay yourself entirely in dividends. What many people do is pay themselves over the National Insurance threshold (£8064, which nowadays essentially matters only for being able to claim a state pension eventually) but below the personal allowance (£10600, below which you don't pay any income tax), and then the remainder in dividends. Note as of the 2015 UK Budget the law relating to dividends has changed which makes the tax due far closer, and that comes into effect for the 2016/2017 tax year.