This Government is committed to standing up for business. By cutting corporation tax, investing in skills and infrastructure as well as increasing business lending, Britain is one of the best countries in the world to do business.
We recognise that many individuals choose to work through their own limited companies; sometimes referred to as personal service companies, and appreciates the positive contribution to the economy of those who choose to work for themselves. However, people can also use intermediaries to disguise what would otherwise be employment income. The IR35 legislation seeks to ensure that what is properly employment income is taxed as such and tackles tax and National Insurance avoidance through the use of intermediaries.
I also appreciate your concerns over the changes to the taxation of dividends. The dividend tax system was intended partly to offset double taxation on profits, but with the sharp reductions in corporation tax the system has not changed. Under the changes, all taxpayers in all tax bands regardless of income will continue to pay less than they would if they were received wages. The tax system will continue to encourage entrepreneurship and investment, through lower rates of Corporation Tax.
The Government believes that travel and subsistence rules have failed to keep pace with changes in working practices. Concerns have also been raised about some of the rules surrounding travel and subsistence drive tax planning and abusive behaviour.
If we decide to proceed with reform, any proposals will undergo a full consultation so that any interested parties can contribute their views for consideration. Details of this consultation process will be published in due course.
By Patrick McLoughlin on October 12, 2015