Contractors Cheated says Minister
Contractors cheated said a Government Minister. So they had to change the dividend rules to stop them making ill gotten gains which hit the tax take and taxpayers.
Nigel Griffiths said that contractors had been abusing the system. So they had to punish them by taxing their dividends. He said:-
“Small businesses told the chancellor and they told me that if we gave them a tax break they would use that money to invest in their businesses. Sadly, they decided to take it out in income by switching it to dividends and putting it in their own pockets.
“That is not what the chancellor meant the tax break for. He meant it:-
- to pay for training,
- buying equipment and
- driving their businesses forward.
So he decided that, as they were abusing it, he would close the loophole.
Self Employed Incorporated
Around 600,000 self employed people have incorporated since the Chancellor brought out his nil-rate band a couple of years back.
The Chancellor was disappointed that small businesses and their accountants had taken advantage of his generous proposals that he brought out. He genuinely wanted to help small businesses. Instead they have abused his concession.
Said Mr. Griffiths, “I’m not criticising people for doing that. However, by choosing to do that, they went against the government‘s wishes. If people want to put money in their back pockets through their businesses that’s up to them. However, the tax regime isn‘t going to help them.”
So, do you think that contractors cheated? Did the Government have to take action?