Freelancers Friend Boris Johnson
Freelancers friend Boris Johnson has stated in his pitch to be Prime Minister that he will raise the higher rate of tax threshold from £50,000 to £80,000. This would save higher rate taxpayers, which most contractors are, £3,000 a year.
The basic rate of tax is currently 20% a year. The current higher rate of tax is 40% a year. This means that a higher percentage of freelancers’ income will be taxed at 20% a year. There is a tax threshold of £12,500 a year for which no tax is paid.
Freelancers lucky enough to earn more than £150,00 a year pay tax at 45% a year.
Limited Company Contractors Use Dividends
Of course, many limited company contractors take part of their remuneration in dividends. Basic rate taxpayers pay 7.5% on dividends. Higher rate taxpayers pay 32.5%. There is a non-paying threshold of £2,000 a year.
Contractors tend to take it out in a mixture of dividends and income depending on what is best financially for them.
Umbrella Company Contractors
Umbrella Company contractors will be especially delighted by this as they have lost a lot of their income in recent years. If they are inside IR35, which most are, they have lost a lot of income recently. The Government and HMRC no longer allow them to claim travel and subsistence against tax.
The new IR35 legislation which starts in April 2020 will no longer allow contractors to decide their own IR35 status. The hiring company / fee payer will now do that. The Government and HMRC now refer to contractors as off payroll workers.
Can You Trust Freelancers Friend Boris Johnson
So is freelancers friend Boris Johnson to be believed? Will he really raise the upper tax band to £80,000 a year?
Well, he was sacked twice for lying, once from a newspaper and once from a Government job.
False Figures on Referendum Bus
He was also the one who had the false figure on e bus claiming that Britain could save a whole heap of money a year that they could spend on the NHS if they left the EU.
He claimed that it would save Britain £39 billion a year. However, when you take into account how much Britain gets back, the real net figure is £6.8 billion a year.
Freelancers Friend Boris Johnson Updating Higher Tax Threshold
His supporters claim that he is only putting back what successive Governments have eroded over the years by not increasing the higher rate amount in line with inflation.
He also appears to be convincing hard right ERG group Conservatives that he will leave the EU without a deal and soft right Remainers that he will leave with a deal.
Freelancers Friend Boris Johnson EU Decision
Then there was the famous time when he was asked to write an article on the EU. This was at the time the referendum was called. He wrote two articles for them, one saying he would campaign to Remain and the other that he would campaign to Leave the EU. After a weekend of thinking about it he told them to use the Leave EU article.
If this was a call over his career rather than his beliefs then it looks like he made the right call.
However, freelancers friend Boris Johnson may well implement this hike in the higher rate threshold if he becomes Prime Minister which is looking highly likely.
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