Autumn Budget 2021 Self Employed and Green Bonds
Published / Last Updated on 28/10/2021
Self Employed
The employers and employees national insurance contributions and dividends Health and Social Care levy of 1.25% suggest to us that the Self Employed should consider moving to a limited company status.
For the self employed, the 1.25% levy will apply to all profits. If a self employed person moves to a limited company and pays themselves a minimum wage, they will limit their employers and employees national insurance contributions meaning that the impact of the levy will be reduced. In addition, whilst the levy applies for tax year 2022/23 and 2023/24, the ex self employed/new company director could leave much of their profits inside the business as retained profit and only pay the extra levy on dividend profits that they decide to distribute/pay out to themselves. You are then free to distribute the retained profit at a later date when the levy is removed.
In addition, the first £2,000 of dividends are tax free.
Green Gilts/Bonds and National Savings and Investments
The British Government’s first two issues of Green Gilts raised £25 billion. More recently, National Savings and Investments (NS&I) launched the Green National Savings Bond, 3 year fixed rate at 0.65%pa interest. That is nothing to shout about but the fact that NS&I is government backed with an unlimited 100% guarantee rather then bank deposits with the Financial Services Compensation Scheme (FSCS) guarantee at £85,000 may mean you consider moving to NS&I if you seek security of capital rather than higher interest rates. Clearly, either way inflation will eat into these returns/spending power.
