Hi,As a small, fairly new, Community Interest Company Limited by Guarantee, some of our directors are likely to be the main people doing the day-to-day work for a while. Do they have to be classed as employees for tax purposes for them to take a wage? If they do, it looks like we/they will be paying over 45% tax in total over £7,475, which just doesn't seem right but I can't find out how else it would work.To explain what I mean I'll use the simplest example I can think of:A CIC limited by…See More
I wish I'd realised this before I set up a CIC! However, it is academic at the moment, as the income from the CIC is still very low and doesn't cover costs let alone salaries. I hope that this problem is sorted out before it…"
"Hi John, thanks for that.
I agree that it would be an extra complexity and pragmatically that may well end up being the deciding issue; but it would not be hugely difficult to implement and it could be the least complex way of righting something…"
Please ask the MP to take an interest in the dividend cap review, if he supported a particular recommendation it would help us raise the profile of the debate when the review starts. Its a built in opportunity to make a change in this…"
"I thought I'd just update everyone that I will be discussing the matter with my local MP who is on the BIS select committee at some point in the next couple of weeks, so if you have any views or feedback on the issue please don't hold back…"
I definitely take the point. Personally, I would probably argue there is a case for lower NI for employees working in CICs and charities given the social benefit of their work. As regards the public sector, any required…"
"I can honestly totally understand where you are coming from Joseph, however you're at the top of a very slippery slope.
If we effectively allow CIC employees lower rates on their salaries, what about employees of charities?…"
Thanks for that.
I've just read through the discussion and there's some interesting stuff there. The social investment (equity/dividends) side of things isn't really something I've looked at much before. My initial…"
"I'd like to add my comment that Recommendation 3 is my preferred option, relating to the discussion you alluded to above. It does sound a much simpler approach to the current situation.
When is the upcoming Regulator's review of the caps…"
I don't want to spoil your night! - and really hope I have got something wrong here, but after my discussions with HMRC today I've been taking a look at the various numbers tonight and I don't think I have - and the…"
Thank you very much for such a detailed reply!
I spoke to a specialist at HMRC today who basically confirms what you say unfortunately.
The upshot is indeed that unless you can make some sort of alternative arrangement re…"
"Really helpful detailed advice by Alastair, thanks.
The CIC only is liable for the Employers NIC contributions (at 13.8%), not the personal tax and NI contributions, so the liability for the CIC is not anywhere as onerous as Joseph is thinking.…"
The advice from the local SE Support Org is a bit close to dodgy. An individual could in theory split the money they receive as Director away from that they receive for the day-to-day work, and in theory if they also do this same day-to-day…"
Yes, it certainly didn't seem correct to me either. Absolutely, it was the Social Enterprise Support Centre in Leeds that gave the advice over the phone (I'm afraid I didn't get a name but they conferred with a colleague…"