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Stop the self employed incorporating to avoid higher rate tax

Submitted on Tuesday 16th August 2011

Published on Monday 22nd August 2011

Current status: Closed

Closed: Wednesday 22nd August 2012

Signatures: 3

Tagged with

income tax ~ Tax ~ UK

Petition Action

Stop the self employed incorporating to avoid higher rate tax

Additional Information

The tax system should be fair for all. An individual who would otherwise pay 40% or 50% tax on a large part of their earnings, where they are professionals in finance, or engineering, for example, form a consultancy business under an incorporated structure and thereby pay a corporation tax rate of 20% on profits up to £300,000. This is the same rate as the main basic income tax rate which the majority of earners in the UK pay, yet other employees on similar incomes are paying 40% or 50% higher rate tax. In many of these companies, the founder employs their partners as Company Secretary and pays them a tax deductible fee and also puts their car costs through the company. Other 'business related' costs are tax deductible too. Legislation should be introduced to ensure that consultants or professionals seeking to incorporate should be employing a minimum of 3 staff before incorporation is permitted. Such legislation would bring greater fairness and equality to the tax system.


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