[softveda]

I am surprised such loopholes still exist in UK. In Australia if you setup a company and 80% of the company's income is only from your own personal services from a single client then your company has to pay tax on personal income tax rates. These sort of loopholes were closed many moons back.

[mjfisher]

I don't think that's really such a huge loophole. Pension aside, it's a 2% difference in total tax burden that's probably going to be swallowed up by other company related admin expenses anyway.

I'm self employed and get the bulk of my income through dividends. As with the example above, I often end up paying roughly the same amount of tax as someone with the equivalent salary would.

The big advantage for me is that I can have a very good year and a very bad year and pay an appropriate (smoothed out) level of income tax across both - which seems fair to me.

[nly]

How is it a loophole? The business owner paying themselves with dividends is only marginally better off than an employee.

Pensions are currently very generous but there's been an expectation for years that the government will crack down on them.