By Lea Pachta
As ContractorCalculator launches available up-to-date online tax calculators incorporating all the new tax measures and rates introduced on 1 April 2010, the true cost to all businesses of tax increases targeting higher earners is revealed.
According to ContractorCalculator CEO Dave Chaplin, the impact of new taxes this month has been seismic. “The changes to the UK’s tax system introduced this month are not only huge, but are also the most complex we have seen in the ten years ContractorCalculator has been publishing IR35 and general tax calculators for contractors, freelancers and small businesses,” says Chaplin.
“ContractorCalculator.co.uk is the first contractor website to make the complex changes to our online tax calculators,” continues Chaplin. “So now employees, business owners, freelancers and contractors can calculate the impact of higher taxes on their personal and business finances.”
He continues: “Tax rises, even those targeting higher earners, increase costs for everyone and impact negatively on economic growth. Each increase not only raises the tax we pay, but we are actually paying for the privilege of paying the higher rate! Raising taxes raises costs for us all, irrespective of our earnings.”
The key changes affecting higher earners, including the owner/managers of many SMEs and contractor limited companies, include:
• Diminishing personal allowances for those earning over £100,000
• The new 50% tax band for higher earners
• The new dividend tax at 45% for dividend income over £150,000.
As Chaplin explains, every organisation that runs a payroll will be forced to amend its systems to take into account the increased and new taxes.
“That means additional costs in development and testing time,” he says.
“It took ContractorCalculator weeks of development time to build and test all the new calculations, time and expense we have had to write-off.
“So, services providers such as payroll firms, software houses and accountants throughout the UK will be similarly updating their systems, and ultimately having to pass on costs to customers. These latest tax rises are an unnecessary cost to the entire UK economy when firms should be investing in growth and productivity.”
What’s more, Chaplin warns that the whole country is likely to have to repeat the same process, at huge cost, after the election. “Whichever party wins will almost certainly introduce a raft of changes and more new taxes, so we will have to go through the whole process of changing how personal and business finances are calculated.”
As a result of the changes, in addition to ContractorCalculator’s established IR35 tax calculators, the site now has online interactive calculators that allow individuals and businesses to calculate:
• Dividend tax, including the new higher rate • PAYE/National Insurance Contributions and net salary, including new higher rates • The effect of the budget on contractors and permanent employees.
“Fortunately, contractor services firms that license our ‘white-label’ calculators will continue to receive a seamless service as the tax updates are included in the license fee and our calculators are automatically updated,” Chaplin explains. “This is another unique service offered by ContractorCalculator.
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