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olimor
13th August 2015, 09:42
Hi All,

Just a quick question for people. The way things are going at the moment, is there going to be any point in contracting after April 2016?

I have been a contractor since 2010, and have managed to work in unbroken contract roles since that time so have been very lucky I suppose. However, I have also been very flexible on the location of the work as I have been able to claim expenses. Sometimes upto around £1500 per month including mileage and accomodation etc.

With the planned changed coming into force in April 2016 to do with expenses, and possibly also the addition that any contractor working via an agency (whether limited company or not) will be classed as inside IR35, will there be any point in continuing?

What do others think here? Are there any "legal" tax efficient ways of working as a contractor any more?

Just after a general consensus.

Intel
13th August 2015, 11:32
Everything is still up in the air.

If expenses get hammered you're looking at losing the tax benefit, so £300 a month on £1500. Assuming approx 22 days a month worked that's £13 a day. Stick your rate up by £15 a day.


If everyone ends up inside IR35 when going through agencies then that's a different kettle of fish. No point worrying though until it happens. If and when it does either the industry will change how it engages contractors or the rates will go up to compensate (mine will anyway...).

b0redom
13th August 2015, 11:43
There is no way I'd earn anything approaching my day rate as a permie, so even if I'm forced inside IR35 I suspect I'll just have to suck it up and continue as usual.

Don't forget even the highest paid contractor is probably paid significantly less than a Capita permie is charged out at per day.

northernladuk
13th August 2015, 12:01
The answer to your question is Yes, No and Maybe...

Yes - If you are a die hard contractor, never ever go permie and are not up for making a reasonable decision when you have all the facts.
No - If you are a lilly livered bedwetter and don't want the hassle of trying to understand the current situation armed with all the facts.
Maybe - If you are a seasoned contractor and are willing to wait until we actually have some facts rather than make knee jerk assumptions based on consultation documents and no hard facts...

Which is right for you?

jmo21
13th August 2015, 12:04
Everything is still up in the air.

If expenses get hammered you're looking at losing the tax benefit, so £300 a month on £1500. Assuming approx 22 days a month worked that's £13 a day. Stick your rate up by £15 a day.


If everyone ends up inside IR35 when going through agencies then that's a different kettle of fish. No point worrying though until it happens. If and when it does either the industry will change how it engages contractors or the rates will go up to compensate (mine will anyway...).

sensible post!

stek
13th August 2015, 12:07
Everything is still up in the air.

If expenses get hammered you're looking at losing the tax benefit, so £300 a month on £1500. Assuming approx 22 days a month worked that's £13 a day. Stick your rate up by £15 a day.


If everyone ends up inside IR35 when going through agencies then that's a different kettle of fish. No point worrying though until it happens. If and when it does either the industry will change how it engages contractors or the rates will go up to compensate (mine will anyway...).

What about the BIK? You're effectively getting your Ltd to pay your travel costs.

olimor
13th August 2015, 12:11
The answer to your question is Yes, No and Maybe...

Yes - If you are a die hard contractor, never ever go permie and are not up for making a reasonable decision when you have all the facts.
No - If you are a lilly livered bedwetter and don't want the hassle of trying to understand the current situation armed with all the facts.
Maybe - If you are a seasoned contractor and are willing to wait until we actually have some facts rather than make knee jerk assumptions based on consultation documents and no hard facts...

Which is right for you?

:spank:

That told me then.

I would probably say I am more between No and Maybe at the moment.

ShandyDrinker
13th August 2015, 12:13
The answer to your question is Yes, No and Maybe...

Yes - If you are a die hard contractor, never ever go permie and are not up for making a reasonable decision when you have all the facts.
No - If you are a lilly livered bedwetter and don't want the hassle of trying to understand the current situation armed with all the facts.
Maybe - If you are a seasoned contractor and are willing to wait until we actually have some facts rather than make knee jerk assumptions based on consultation documents and no hard facts...

Which is right for you?

This should have a survey...

The rational answer has to be maybe. No matter how much we debate and speculate on here, there are too many unknowns to make a decision yet.

BrilloPad
13th August 2015, 12:17
No

Next.

Intel
13th August 2015, 12:17
What about the BIK? You're effectively getting your Ltd to pay your travel costs.

True. My comment was a corporation tax impact only. Depends on how you get the cash to pay the expenses, in most cases dividends which are then used to pay for the expenses out of post tax income. Depending on your dividend tax rate you end up with a value more than 20%.

Either way my assertion was that the impact isn't going to cost you 100% more. It'll be more likely 20-25% more due to paying from post tax income. Easily covered with a modest rate rise.

Inside IR35 assumed due to agency supply is more of a worry but again, until you can see the whites of their eyes not a lot of point worrying.

SpontaneousOrder
13th August 2015, 12:52
True. My comment was a corporation tax impact only. Depends on how you get the cash to pay the expenses, in most cases dividends which are then used to pay for the expenses out of post tax income. Depending on your dividend tax rate you end up with a value more than 20%.

Either way my assertion was that the impact isn't going to cost you 100% more. It'll be more likely 20-25% more due to paying from post tax income. Easily covered with a modest rate rise.

Inside IR35 assumed due to agency supply is more of a worry but again, until you can see the whites of their eyes not a lot of point worrying.

More like >50% if you still want to take out up to the higher rate threshold. 80% after CT, around 50% left after tax is taken off that at higher rate.

On 1500 per month, for 10 months, thats about 7-8k worse off per year.

diseasex
13th August 2015, 13:06
More like >50% if you still want to take out up to the higher rate threshold. 80% after CT, around 50% left after tax is taken off that at higher rate.

On 1500 per month, for 10 months, thats about 7-8k worse off per year.

Not commenting on expenses but on higher tax on dividends etc in general - just keep the money inside of your ltd and invest... Low dividend = no problem . Economy will grow because contractors will now take the risk and invest within their company instead of pocketing cash...
To my understanding that's what they want and that's what im going to do..

Intel
13th August 2015, 13:17
More like >50% if you still want to take out up to the higher rate threshold. 80% after CT, around 50% left after tax is taken off that at higher rate.

On 1500 per month, for 10 months, thats about 7-8k worse off per year.

Back of a fag packet calculations. Simplified because I'm simple....

Assuming rate of 500.
220 days billable
10 months expenses at 1500 a month

Note that the below doesn't knock salary off before corporation tax, and having revised these figures 3 times I'm 1) not doing it again, 2) giving up on my dreams of becoming an accountant.

Doesn't change the outcome though, as per pr1's note, extra cost in this scenario is 40% of the total expenses claimed.

Current

Total Billable - 220 * 500 = 110000
Expenses - 15000
Profit - 95000
Corporation Tax = 19000
Profit after tax = 76000
2015 Salary and basic rate dividend allowance - 42385
Higher Rate Dividends - 33615
Higher Rate Dividend Tax = 33615*.25 = 8403
Total Income = 42385 + (33615*.75) = 67596

Expenses Out Of Taxable Income

Total Billable = 110000
Profit = 110000
Corporation Tax = 22000
Profit after tax = 88000
Salary and divi allowance = 42385
Higher rate dividend tax = 45615 * .25 = 11403
total income = 79596
Minus expenses of 15000 = 61596.

Difference between the two is 6000 (40% of the original expenses value)

NB: figures are subject to revision once I'm sober....... and once eek has pointed out yet another c*ck up in my data...

TykeMerc
13th August 2015, 13:26
Not commenting on expenses but on higher tax on dividends etc in general - just keep the money inside of your ltd and invest... Low dividend = no problem . Economy will grow because contractors will now take the risk and invest within their company instead of pocketing cash...
To my understanding that's what they want and that's what im going to do..

Invest in what I wonder?

Drawer space? Darning wool? More "I'm never coming back to CUK" posts? Or just more utter b0ll0cks?

I wonder just how many times this thread will be recreated by April 2016? It's already at least 3.

diseasex
13th August 2015, 13:27
Invest in what I wonder?

Drawer space? Darning wool? More "I'm never coming back to CUK" posts? Or just more utter b0ll0cks?

I wonder just how many times this thread will be recreated by April 2015? It's already at least 3.

whiskey has 40% try it. If you throw it up it will give you 100% return ;D

TykeMerc
13th August 2015, 13:36
whiskey has 40% try it. If you throw it up it will give you 100% return ;D

I see, more utter b0ll0cks as that post makes absolutely no sense at all.

LondonManc
13th August 2015, 13:39
Invest in what I wonder?

Drawer space? Darning wool? More "I'm never coming back to CUK" posts? Or just more utter b0ll0cks?

I wonder just how many times this thread will be recreated by April 2015? It's already at least 3.

Without a time machine you've had your lot pal.

TykeMerc
13th August 2015, 13:42
Without a time machine you've had your lot pal.

Whoops, thanks :D

eek
13th August 2015, 13:43
Back of a fag packet calculations. Simplified because I'm simple....

Assuming low rate of 350 (which still drops us into higher rate tax)
280 days billable
10 months expenses at 1500 a month

Current

Total Billable - 280 * 350 = 98000
Expenses - 15000
Profit - 83000
2015 Salary and basic rate dividend allowance - 42385
Higher Rate Dividends - 40615
Higher Rate Dividend Tax = 40615*.25 = 10153
Total Income = 42385 + (40615*.75) = 72846

Expenses Out Of Taxable Income

Total Billable = 98000
Profit = 98000
Salary and divi allowance = 42385
Higher rate dividend tax = 55615 * .25 = 13903
total income = 84096
Minus expenses of 15000 = 69096.

Difference between the two is 3750 (25% of the original expenses value)

NB: figures are subject to revision once I'm sober....... ;)

You missed corporation tax off those examples...

Intel
13th August 2015, 13:45
You missed corporation tax off those examples...

Bullocks. This is why I employ an accountant.....

One second whilst I fix it.....

Intel
13th August 2015, 13:51
You missed corporation tax off those examples...

Fixed :bang:

pr1
13th August 2015, 13:51
while you're at it, 280 billable days/year is more than 5 days/week (@52 weeks per year)

Intel
13th August 2015, 13:56
while you're at it, 280 billable days/year is more than 5 days/week (@52 weeks per year)

FFS....I really really need to check my cr*p before posting it ;)

I'll fix it to 220 days @ 500 in a bit. Want to keep it in the higher tax rate for the most realistic figures. Not that the figures I've done so far have been realistic....... ;)

pr1
13th August 2015, 14:01
it doesn't matter what you do to the numbers, the result is always going to show the difference to be 40% of the expenses (assuming you normally take up to higher rate tax limit) because you're losing the relief from 20% corp tax then 25% higher rate tax (0.8*0.75 = 0.6)

WTFH
13th August 2015, 14:02
To answer the original question:


Nasal Sex.

eek
13th August 2015, 14:09
FFS....I really really need to check my cr*p before posting it ;)

I'll fix it to 220 days @ 500 in a bit. Want to keep it in the higher tax rate for the most realistic figures. Not that the figures I've done so far have been realistic....... ;)

I will wait for that before extending it..

The important scenario is that many people only go up to the 40% barrier £42385 leaving the rest in the company's coffers.

Now you have to take those expenses out after tax has been paid.

Firstly that £15000 now needs to came from your taxed dividend payments at the higher rate so you need to extract £20000 from the company.

So suddenly your income isn't £42385 but nearer £62385.

That takes you above the child benefit cut off so suddenly you may need another £2000 to cover that loss..

So if in 2015-16 you extract £42385 from the company.
For the exact same standard of living in 2016-17 you need to extract £64385..

diseasex
13th August 2015, 14:13
I will wait for that before extending it..

The important scenario is that many people only go up to the 40% barrier £42385 leaving the rest in the company's coffers.

Now you have to take those expenses out after tax has been paid.

Firstly that £15000 now needs to came from your taxed dividend payments at the higher rate so you need to extract £20000 from the company.

So suddenly your income isn't £42385 but nearer £62385.

That takes you above the child benefit cut off so suddenly you may need another £2000 to cover that loss..

So if in 2015-16 you extract £42385 from the company.
For the exact same standard of living in 2016-17 you need to extract £64385..

That's all based on 1500 T&S pm , I mean realistically who spends that much ? mine is like 200-300 when im traveling..

eek
13th August 2015, 14:16
That's all based on 1500 T&S pm , I mean realistically who spends that much ? mine is like 200-300 when im traveling..

nope its £1250 a month or so.

Given that my train ticket is £196 a weekend (second class) if I don't prebook and often that is cheaper than prebooked tickets its not difficult to hit £1000 a month on travel alone.

I did that this month before the tube strike. That's added another £200 just for single nights in hotels..

Intel
13th August 2015, 14:19
I will wait for that before extending it..

The important scenario is that many people only go up to the 40% barrier £42385 leaving the rest in the company's coffers.

Now you have to take those expenses out after tax has been paid.

Firstly that £15000 now needs to came from your taxed dividend payments at the higher rate so you need to extract £20000 from the company.

So suddenly your income isn't £42385 but nearer £62385.

That takes you above the child benefit cut off so suddenly you may need another £2000 to cover that loss..

So if in 2015-16 you extract £42385 from the company.
For the exact same standard of living in 2016-17 you need to extract £64385..


Good shout, like all things in life it depends on your personal circumstances. I certainly didn't take into account kids as I'm young, free and single....well, single anyway....

I did prefix the figures as simplified, maybe I should have emphasised how simplified...


Bashed the figures a bit more. Hopefully fixed (for my scenario) now. :bang:

The Spartan
13th August 2015, 14:28
That's all based on 1500 T&S pm , I mean realistically who spends that much ? mine is like 200-300 when im traveling..

Staying in London isn't cheap

pr1
13th August 2015, 14:29
Good shout, like all things in life it depends on your personal circumstances. I certainly didn't take into account kids as I'm young, free and single....well, single anyway....

I did prefix the figures as simplified, maybe I should have emphasised how simplified...


Bashed the figures a bit more. Hopefully fixed (for my scenario) now. :bang:

You definitely should stay in touch with your accountant - although it doesn't change the result, in your example you're paying corporation tax before taking off salary (10k salary is a business expense). Don't worry, once you change it again we'll notice something else...

and @diseasex - it's definitely plausible for people to spend 1k++ per month if they need 3 or 4 hotel nights per week

Intel
13th August 2015, 14:29
it doesn't matter what you do to the numbers, the result is always going to show the difference to be 40% of the expenses (assuming you normally take up to higher rate tax limit) because you're losing the relief from 20% corp tax then 25% higher rate tax (0.8*0.75 = 0.6)

Yep in my scenario it'll always be 40%. I just like to work the figures to prove it to myself. Shame I'm cr*p at the figures ;)

So 40% of 1500 expenses per month is 600. Divided by approx 22 days per month is £28 a day. Hence in my niche scenario the rate needs to go up by that to cover the removal of tax relief assuming I need to pick up 1500 a month in expenses (I'm way under that to be honest).

Not a huge amount in the grand scheme of things and probably something the clients would stand.

Intel
13th August 2015, 14:30
You definitely should stay in touch with your accountant - although it doesn't change the result, in your example you're paying corporation tax before taking off salary (10k salary is a business expense). Don't worry, once you change it again we'll notice something else...

and @diseasex - it's definitely plausible for people to spend 1k++ per month if they need 3 or 4 hotel nights per week

FFS. Again.

LondonManc
13th August 2015, 14:37
That's all based on 1500 T&S pm , I mean realistically who spends that much ? mine is like 200-300 when im traveling..

Where do you sleep, doorways?

olimor
13th August 2015, 14:37
That's all based on 1500 T&S pm , I mean realistically who spends that much ? mine is like 200-300 when im traveling..

What do you regard as travelling?

I claim £126 a month and I work 7 miles away from where I live.

I used to work in Swindon which is a 160 mile round trip each day which (for a 4 week month) equates to £1440 (with a .45p per mile charge).

pr1
13th August 2015, 14:38
Yep in my scenario it'll always be 40%. I just like to work the figures to prove it to myself. Shame I'm cr*p at the figures ;)

So 40% of 1500 expenses per month is 600. Divided by approx 22 days per month is £28 a day. Hence in my niche scenario the rate needs to go up by that to cover the removal of tax relief assuming I need to pick up 1500 a month in expenses (I'm way under that to be honest).

Not a huge amount in the grand scheme of things and probably something the clients would stand.

and for me it's even less impact, I have a short commute from home and I'm on a lot less than 500pd - being able to claim it or not is pretty negligible for me but I can see how the sledge hammer to crack a nut approach might leave some scotland-to-london contractors crippled

(crippled in that they probably wont be able to afford to take out their fourth BTL mortgage or they'll have to postpone upgrading their porsche to a ferrari)

MicrosoftBob
13th August 2015, 14:44
I can't imagine carrying on with my 600 mile round trip to client site if expenses aren't allowable, they won't pay more so it's either going to be go permy or commute into London and ignore other contracts unless they don't involve a hotel/b&B/hovel during the week

eek
13th August 2015, 15:01
I can't imagine carrying on with my 600 mile round trip to client site if expenses aren't allowable, they won't pay more so it's either going to be go permy or commute into London and ignore other contracts unless they don't involve a hotel/b&B/hovel during the week

I think we will continually come back to this problem.... Which was one reason for my survey to see what proportion of contractors do do a weekly commute...

TykeMerc
13th August 2015, 15:09
That's all based on 1500 T&S pm , I mean realistically who spends that much ? mine is like 200-300 when im traveling..

Don't be such a bonehead, or at least do an impression of having a brain when posting from that ID.

Plenty of people have monthly T&S expenses that high and higher. I have averaged higher than that for most of the last decade, none of it working in London. If I stayed in the same hotels that loads of the permy consultants I work with or along side then I'd top an average of £2,750 a month.

diseasex
13th August 2015, 15:11
Don't be such a bonehead, or at least do an impression of having a brain when posting from that ID.

Plenty of people have monthly T&S expenses that high and higher. I have averaged higher than that for most of the last decade, none of it working in London. If I stayed in the same hotels that loads of the permy consultants I work with or along side then I'd top an average of £2,750 a month.

Well you obviously have no idea how to invest, I recon you have no idea how to save too.

TykeMerc
13th August 2015, 15:15
I think we will continually come back to this problem.... Which was one reason for my survey to see what proportion of contractors do do a weekly commute...

Indeed, the really telling thing would be to understand just how many thousands of permies work with comparable T&S figures which are paid (not as taxable benefits) by their employers.

Speaking from my perspective; which might be unusual; I've worked with plenty of permies that move from project to project just the same way I do. I've just finished 12 months working with 4 permie SAP consultants each charging at least as much T&S as me and they've all gone on to new projects, again away from home.

stek
13th August 2015, 15:30
Well you obviously have no idea how to invest, I recon you have no idea how to save too.

I reckon you've no idea how to spell.

diseasex
13th August 2015, 15:33
I reckon you've no idea how to spell.

Pardon me, I'm not native.
Guy is complaining that he cant claim 2700 for 5 star hotel anymore and all you pick up is my grammar. Jesus you can have a room for 3 months for that cash , gods sake. I was very poor few years back..

ShandyDrinker
13th August 2015, 15:48
You'll always get some people willing to slum it in a B&B or rental for £10-£20 per night (depending on location) and those at the other end of the scale wanting to stay in a 5 star hotel. Providing it can be justified as wholly and exclusively for business use it matters not.

What I've seen is when permies are seconded to another office, more often than not they're put up in either a decent hotel or flat for the duration to ensure they get the work done and get to live in a home from home. You can guarantee they or consultancy employees aren't paying a BIK for the privilege.

Unless I'm missing something (probably), I can see a return to clients having to pay travel and accommodation in the event they have to take on someone not local. For those clients not based in a major city I can imagine this is going to have a significant impact.

TykeMerc
13th August 2015, 16:12
Pardon me, I'm not native.
Guy is complaining that he cant claim 2700 for 5 star hotel anymore and all you pick up is my grammar. Jesus you can have a room for 3 months for that cash , gods sake. I was very poor few years back..

No, do try to gain some reading comprehension along with a basic education...

I said my T&S expenses average higher than £1500 a month and have done for many years and IF I stayed in the same hotels as many of the PERMIES I work along side on projects THEN it would be £2750+.

Peej
13th August 2015, 16:27
I've been contracting since 1988 so I've really seen some changes. The ironic thing here is the argument about travel etc. was the major issue prior to '99 when IR35 came along and we seem to have gone full circle. In many ways, the arguments being had back in the 80's and 90's are the same as now and have never been satisfactorily resolved.

For me, rates etc. have plummeted a great deal since those days though and, although I've had some good contracts that have paid well recently, I've also had some stinkers and the one I'm just finishing has a rate lower than any I've worked for in the past 25 years (There's a reason i took it though but don't want to explain it here).

Depends what you do, of course but I won't be in a position to just slap £15 an hour on my rate. I simply won't get any work.

If I continue this way then the answer to your question is no, it's not worth it, but I have to temper that with the fact I can't really do anything else and it will be really hard for me to get permie work at the ..hem-hem .. senior end of the market.

However, those who are saying wait and see etc. - although not strictly answering your question - have a point in that when IR35 was announced there were all types of doom and gloom scenarios being mooted. Then people bandied together, letters were written, groups formed and pressure put on and here we are 15 years later still arguing about it and for many of us *touches wood* it's never even been an issue.

Putting everyone inside IR35 for working through an Agency is going to hit a huge body - the Agencies themselves - if everyone decides it's not worth it or finds another way to work so I don't think this is a closed matter at all. And back in '99 nobody thought Gordon Brown and HMR&C would suddenly find themselves faced with legal challenges. I doubt this will sail through, if at all. I strongly suspect it will still be being kicked around in another 15 years.

SueEllen
13th August 2015, 17:05
Pardon me, I'm not native.

That is no excuse.

I have family and friends whose second, third or fourth language is English. Those who are adults tend to have English spelling and comprehension better than mine.



Guy is complaining that he cant claim 2700 for 5 star hotel anymore and all you pick up is my grammar. Jesus you can have a room for 3 months for that cash , gods sake. I was very poor few years back..
You are writing on a forum with adults not teenagers.

Some of these adults are over 60 and were there at the start of the computing industry, so the minimum you can do is be respectful and write properly.

After all as you are not native you won't be a horrible disrespectful person who doesn't give a f*** like British young people.

diseasex
13th August 2015, 17:31
That is no excuse.

I have family and friends whose second, third or fourth language is English. Those who are adults tend to have English spelling and comprehension better than mine.


You are writing on a forum with adults not teenagers.

Some of these adults are over 60 and were there at the start of the computing industry, so the minimum you can do is be respectful and write properly.

After all as you are not native you won't be a horrible disrespectful person who doesn't give a f*** like British young people.

I MADE A TYPO! I'm terribly sorry I'm not educated in not making typos field. Sorry that I had to be sarcastic, but that's just crazy! Now how about some respect to people that make typos sometimes, when writing really fast and carry on working? Especially if they weren't typing in this language their whole life? Why am I even forced to explain this...

Bottom line is , nobody is happy with current legislations, and some people will be hit more than the others. But from my perspective, and I want to keep cash within limited, I wont be hit nearly at all. And if that will make more people quit contracting and go permie, will make some stay within their area locally, or rates will increase to compensate this hit ... well that's even better for the rest of us.
Unpopular opinion ? Maybe, but thats how i think

cojak
13th August 2015, 18:02
Respect for all in Professional forums please.

TykeMerc
13th August 2015, 20:04
Respect for all in Professional forums please.

Kill the sockies and blatant trolls off from the professional forums please.

SpontaneousOrder
13th August 2015, 21:11
That's all based on 1500 T&S pm , I mean realistically who spends that much ? mine is like 200-300 when im traveling..

My train fare from east anglia to London is nearly 200 a week alone. Then I stay in a hotel 1 night a week otherwise I start getting ill after a few months. Hotels in London are expensive.


Pardon me, I'm not native.
Guy is complaining that he cant claim 2700 for 5 star hotel anymore and all you pick up is my grammar. Jesus you can have a room for 3 months for that cash , gods sake. I was very poor few years back..

A travel lodge in London 5 nights a week will cost you almost that much - not including getting there and back.

eek
13th August 2015, 21:23
A travel lodge in London 5 nights a week will cost you almost that much - not including getting there and back.

Yep with the tube strikes taking place I looked at the cost £125 a night... That's £500 a week or £2000 a month before any other costs...

Intel
13th August 2015, 22:34
Yep with the tube strikes taking place I looked at the cost £125 a night... That's £500 a week or £2000 a month before any other costs...

Come and work up north. It's a lot cheaper and we have awesome pies..... ;-)

One serious note I can earn almost as much as London in Manchester, Sheffield and Leeds, and have half the living costs . No brainer.

TykeMerc
13th August 2015, 23:26
Come and work up north. It's a lot cheaper and we have awesome pies..... ;-)

One serious note I can earn almost as much as London in Manchester, Sheffield and Leeds, and have half the living costs . No brainer.

It's not a matter of choice for me, the vast majority of the type of projects I work on are down South, but outside London. The nearest project I've had in over a decade has been a bit under 100 miles each way. I'd be quite happy to have projects available in Leeds or Manchester, I could comfortably commute those.

expat
14th August 2015, 06:28
Quite a few contractors work in other countries too. If you live well outside London and you have a contract in Munich with a weekly commute, expenses as low as £1500 a month is only a dream.

NotAllThere
14th August 2015, 07:48
Hi All,

Just a quick question for people. The way things are going at the moment, is there going to be any point in contracting after April 2016?...A few points:


Pre around 1997, expenses to and from place of work were not generally claimable by contractors. The contract market nonetheless increased.
When IR35 came in (2000), there were further predictions of doom, and the contract market (after stalling for a bit due to other reasons) nonetheless increased.
It took years before the actual working out of IR35 became clear.
If you want to increase your take home pay, the focus should be on seeking to earn more, not paying less tax (while still taking advantage of any concessions/loopholes you can find). Taxes can always go up and down, and taxation is never fair(tm) for everyone.

The advantages of contracting (by and large):

Take home pay more than doing the same kind of work as a permie.
No appraisals, no target setting, no HR interference.
Choosing own way of working.
Control of your own career path
Flexibility over when you work
Opportunity to move into other business areas


Obviously the first of these is primary to most. If after all the changes it remains true, then there would be point in continuing. For others the remaining points may still swing the balance.


Quite a few contractors work in other countries too. If you live well outside London and you have a contract in Munich with a weekly commute, expenses as low as £1500 a month is only a dream.
Pre 97, one exception to expenses for travelling to work was if your place of work was in another country. In 96 I was working for EuroTunnel, so I asked if I could be based in Calais. It was agreed, and I subsequently reduced my tax bill significantly. This exception may still be on the books, for all I know!

dynamicsaxcontractor
14th August 2015, 07:50
Quite a few contractors work in other countries too. If you live well outside London and you have a contract in Munich with a weekly commute, expenses as low as £1500 a month is only a dream.

I haven't posted here for many years, but I have still been reading.

This topic is getting me fairly upset, especially when some "contractors?" are deciding what's reasonable travel expense or not. I have been working abroad on different projects for the last 3 years. Flying out to the other side of Europe and staying at hotels in more expensive European countries adds up quick. Last year I had travel and subsistence of £30K, year before £50K. If I can't claim this back from the company in the future I simply won't be able to take these contracts. That would be a shame for the HMRC as I have brought a lot of money in from abroad and paid tax for here.

expat
14th August 2015, 07:56
I haven't posted here for many years, but I have still been reading.

This topic is getting me fairly upset, especially when some "contractors?" are deciding what's reasonable travel expense or not. I have been working abroad on different projects for the last 3 years. Flying out to the other side of Europe and staying at hotels in more expensive European countries adds up quick. Last year I had travel and subsistence of £50K, year before £80K. If I can't claim this back from the company in the future I simply won't be able to take these contracts. That would be a shame for the HMRC as I have brought a lot of money in from abroad and paid tax for here.In my case I think I would just stop coming back. I would find the UK easier to give up than my contracts in other countries. YMMV.

The Spartan
14th August 2015, 08:36
I unfortunately do not live in an area that has many contracts and will generally need to travel and stay over for the majority of the contracts that I do so for me it would mean I'd have to close the company. The dividend tax will mean that I will pay an extra 2k a year which I'm fine with as compared to the amount of expenses I claim when working in say London it's a small amount.

gables
14th August 2015, 08:39
A few points:


Pre around 1997, expenses to and from place of work were not generally claimable by contractors. The contract market nonetheless increased.
When IR35 came in (2000), there were further predictions of doom, and the contract market (after stalling for a bit due to other reasons) nonetheless increased.
It took years before the actual working out of IR35 became clear.
If you want to increase your take home pay, the focus should be on seeking to earn more, not paying less tax (while still taking advantage of any concessions/loopholes you can find). Taxes can always go up and down, and taxation is never fair(tm) for everyone.

The advantages of contracting (by and large):

Take home pay more than doing the same kind of work as a permie.
No appraisals, no target setting, no HR interference.
Choosing own way of working.
Control of your own career path
Flexibility over when you work
Opportunity to move into other business areas


Obviously the first of these is primary to most. If after all the changes it remains true, then there would be point in continuing. For others the remaining points may still swing the balance.



Nail on the head

diseasex
14th August 2015, 08:53
Nail on the head

as for tykemerc's question what to invest instead of withdrawing the cash from ltd as higher dividend -
HL Multi-Manager Income & Growth Trust Income or similar
multiasset means the risk is spread over many assets
dividend is paid (and not interest) that means the CT has been paid on that already (if I understand it right). And indexation will reduce CT significantly too if you sell after few years

just an example

cojak
14th August 2015, 09:21
Do not post urls of 'investment schemes' please.

LondonManc
14th August 2015, 09:35
A few points:


Pre around 1997, expenses to and from place of work were not generally claimable by contractors. The contract market nonetheless increased.
When IR35 came in (2000), there were further predictions of doom, and the contract market (after stalling for a bit due to other reasons) nonetheless increased.
It took years before the actual working out of IR35 became clear.
If you want to increase your take home pay, the focus should be on seeking to earn more, not paying less tax (while still taking advantage of any concessions/loopholes you can find). Taxes can always go up and down, and taxation is never fair(tm) for everyone.

The advantages of contracting (by and large):

Take home pay more than doing the same kind of work as a permie.
No appraisals, no target setting, no HR interference.
Choosing own way of working.
Control of your own career path
Flexibility over when you work
Opportunity to move into other business areas


Obviously the first of these is primary to most. If after all the changes it remains true, then there would be point in continuing. For others the remaining points may still swing the balance.


Pre 97, one exception to expenses for travelling to work was if your place of work was in another country. In 96 I was working for EuroTunnel, so I asked if I could be based in Calais. It was agreed, and I subsequently reduced my tax bill significantly. This exception may still be on the books, for all I know!

I disagree. A lot of contractors do project-based work and being in one company won't give them that as they'll inevitably drift into supporting what they've built and becoming stale. It's probably fairer to say that the improved take home balances against the risk of short term contracts.

expat
14th August 2015, 09:41
I disagree. A lot of contractors do project-based work and being in one company won't give them that as they'll inevitably drift into supporting what they've built and becoming stale. It's probably fairer to say that the improved take home balances against the risk of short term contracts.Build it in 6 months. Support it for 3 years. Gaak!

expat
14th August 2015, 09:43
as for tykemerc's question what to invest instead of withdrawing the cash from ltd as higher dividend -
HL Multi-Manager Income & Growth Trust Income or similar
multiasset means the risk is spread over many assets
dividend is paid (and not interest) that means the CT has been paid on that already (if I understand it right). And indexation will reduce CT significantly too if you sell after few years

just an exampleCan a company invest in that?

diseasex
14th August 2015, 09:49
Can a company invest in that?

Yes,
Hargreaves for example don't show it on their website but when I asked their support they have sent me forms to fill to have the account on company name
now if you profit from shares sale you pay CT minus indexation (over the years CT will be significantly reduced thanks to indexation)
if you profit on dividend , to my understanding you don't pay CT on it as it had it already paid in the company that gave the dividend. Unless you pay it out
That seem like a nice get-rich scheme if you reinvest dividends and let the capital grow =
)
So you don't pay dividend yourself at 7.5% or higher just keep in the company and invest in assets

MarkT
14th August 2015, 10:16
Maybe the way around this would be for a new arrangement between contractors, recruiters and clients.

Client wants a contractor and asks Recruiter to find a contractor for him.
Recruiter asks contractor to have interview/take job with Client.
Client then offers contractor a contract directly with them, part of which included a % of their rate to be paid to the recruiter as a finders fee.

Client then has direct contract with contractor and recruiter still gets paid.

Workable?

TykeMerc
14th August 2015, 10:17
as for tykemerc's question what to invest instead of withdrawing the cash from ltd as higher dividend -
HL Multi-Manager Income & Growth Trust Income or similar
multiasset means the risk is spread over many assets
dividend is paid (and not interest) that means the CT has been paid on that already (if I understand it right). And indexation will reduce CT significantly too if you sell after few years

just an example

You said invest "in the business", not use the business' money to invest, there's a monumental difference. As a business owner you REALLY need to get your head around this.

If nothing else profits realised on investments done within the YourCo Ltd vehicle will attract CT just like any other revenue generation the company does and getting the money out of the company has exactly the same limitations as money realised by contracting. In fact what you're suggesting as your grand scheme is simply how you use the warchest, it's nothing new and something many of us already do in one form or another, there are cautions to pay attention to over how much of the business can be investments before other regulations kick in.

Investing "in the business" would involve buying plant or machinery to make or do things, possibly buying a suite of PC's and software to run training courses for customers on, putting an employee (not yourself as the owner) through training to earn fees would also be "investing in the business".

Tax burden and T&S expenses are serious considerations that help decide if business is worth doing and for those of us that routinely have significant T&S there's notable potential for it to become impractical or irrational to stay in business.

cojak
14th August 2015, 10:17
Or contractor pays recruiter, as in the entertainment business (currently not legal atm).

diseasex
14th August 2015, 10:19
Maybe the way around this would be for a new arrangement between contractors, recruiters and clients.

Client wants a contractor and asks Recruiter to find a contractor for him.
Recruiter asks contractor to have interview/take job with Client.
Client then offers contractor a contract directly with them, part of which included a % of their rate to be paid to the recruiter as a finders fee.

Client then has direct contract with contractor and recruiter still gets paid.

Workable?

I think who are you in contract with doesn't matter. What matters is how many employees have you got. If none then you will get hammered

MarkT
14th August 2015, 10:25
Fair point, but I employ myself and my wife....

northernladuk
14th August 2015, 10:28
Fair point, but I employ myself and my wife....

Do you really.... you sure?

TykeMerc
14th August 2015, 10:29
Fair point, but I employ myself and my wife....

Sadly that one won't wash as "employing" an officer and shareholder without a contract of employment and not paying minimum wage isn't what is meant by the conventional use of the word employed.

MarkT
14th August 2015, 10:42
Sadly that one won't wash as "employing" an officer and shareholder without a contract of employment and not paying minimum wage isn't what is meant by the conventional use of the word employed.

Well, that's pretty simple to sort out isn't it? A contract of employment and we pay both of us more than the minimum wage. I've had three accountants tell me that's perfectly above board. Obviously things may change, but we, as contractors, have always found a way around things before, I'd expect a similar way to be found this time.

We should just wait for the proposal though, I suppose it's possible for them to just leave the whole thing alone ? He asks hopefully!

curtis
14th August 2015, 11:23
Earning more money will be primary for most but for me yes it will be frustrating as I would rather be earning more than less but I always said from the start even if I earnt the same or even a less contracting I would still do it.

For me its a lifestyle choice, one thing is I like to know I can have a break after a contract if I want to and although through choice I have only done this a few times so far in a few years I hope to take more time off inbetween and get a better work/life balance I would not get this if I left contracting so I would stay contracting regardless.

sartois
14th August 2015, 14:41
Or contractor pays recruiter, as in the entertainment business (currently not legal atm).

That would be interesting... It's one thing to have an agent taking a % behind the scenes where I can remain happily oblivious to what they are getting for my work, but paying them directly even though it would make no financial difference to what I end up taking feels like it would be somewhat painful.

LondonManc
14th August 2015, 15:03
That would be interesting... It's one thing to have an agent taking a % behind the scenes where I can remain happily oblivious to what they are getting for my work, but paying them directly even though it would make no financial difference to what I end up taking feels like it would be somewhat painful.

However, it would put the power in your hands. Quite like the idea of it myself. Unfortunately that's not how it works in entertainment where the production company sends the agency the money then you eventually get a cheque from the agent

TykeMerc
14th August 2015, 15:43
However, it would put the power in your hands. Quite like the idea of it myself. Unfortunately that's not how it works in entertainment where the production company sends the agency the money then you eventually get a cheque from the agent

Which varies from how most of us get paid in the Agent relationship to what material extent?

If you think that the Agents will heavily modify their entire working practices an business models to accommodate the contractors that dislike the new legislation then you're barking, they will just refuse to deal with anyone trying to be outside the new IR35 and T&S rules.

LondonManc
14th August 2015, 15:52
Which varies from how most of us get paid in the Agent relationship to what material extent?

If you think that the Agents will heavily modify their entire working practices an business models to accommodate the contractors that dislike the new legislation then you're barking, they will just refuse to deal with anyone trying to be outside the new IR35 and T&S rules.

It won't - it was someone else that suggested we'd pay the agents. I'm saying that, based on what my son has done on TV, it doesn't work that way. The money still gets to the agent first, rather than us paying the agents once we've been paid.

Along the lines of what you've said, I can't see ClientCos setting up payment mechanisms to each Contractor Ltd either when it's currently one figure/transaction to agentco.

TykeMerc
14th August 2015, 16:01
Indeed, there won't be many; if any; clients willing to deal with multiple suppliers when they're used to dealing with one or two agencies and paying a couple of times a year.
The client-agent business model works well for the clients, they've no motivation to change it at present, so long as they can get contractor resource that won't change.

Gordon Ice
18th August 2015, 20:52
Well, that's pretty simple to sort out isn't it? A contract of employment and we pay both of us more than the minimum wage. I've had three accountants tell me that's perfectly above board. Obviously things may change, but we, as contractors, have always found a way around things before, I'd expect a similar way to be found this time.

We should just wait for the proposal though, I suppose it's possible for them to just leave the whole thing alone ? He asks hopefully!

If it's a simple as "number of employees" I'll be employing the entire family on zero hours contracts :smokin

It's all speculation at the moment and it's really to take a doom and gloom view.. we (Contractors) will prevail!

Evil Hangover
22nd August 2015, 13:24
No

Next.

+ 1

Any point in breathing after April 2016 ?

If you are good at what you do, you should be able to figure this out like a grown up.

Good opportunity to thin the herd of the "ubiquitous I expect to get paid a lot of money because I deserve it and I'm like really good". Yeah right.

HarryCodLife
28th August 2015, 07:38
There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.
:bang:

Ticktock
28th August 2015, 09:15
There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.
:bang:

There are also unknown knowns, but not a lot of people know that. [/Michael Caine mode]

For me, this way of working is mostly about avoiding performance plans, annual reviews, 360s, the boredom of being in one place for too long, the knowledge that even if I hate everyone I work with / hate the project then it's only for (normally) 3 months and then I'm out of there.

I do need a higher rate - partly, yes I am worth it, but partly because the nature of what I do means I will be in and out of companies all of the time. There is no long-term need for someone like me in most businesses, and so I run a constant risk of bench time which I need to compensate for. As long as I can pay the bills and I'm at least as well off as a permie (taking into account bench time, expenses, etc) then I will work this way.

MercladUK
28th August 2015, 09:57
The answer to your question is Yes, No and Maybe...

Yes - If you are a die hard contractor, never ever go permie and are not up for making a reasonable decision when you have all the facts.
No - If you are a lilly livered bedwetter and don't want the hassle of trying to understand the current situation armed with all the facts.
Maybe - If you are a seasoned contractor and are willing to wait until we actually have some facts rather than make knee jerk assumptions based on consultation documents and no hard facts...

Which is right for you?

Jeez

the question was based on what we know now, not a knee jerk reaction.

Lighten up or count to 10 before posting please.

dynamicsaxcontractor
5th September 2015, 16:40
Ok, to start I am sorry if I should have known as I haven't read everything about this.

But, what is defining if you can claim expenses or not if the new proposed rules actually goes ahead? Is it based on the number of employees, or is it anything else? I am thinking of if its possible to bypass this by setting up consultancy company together with fellow contractors and therefor being a consultancy.

northernladuk
5th September 2015, 17:57
Ok, to start I am sorry if I should have known as I haven't read everything about this.

But, what is defining if you can claim expenses or not if the new proposed rules actually goes ahead? Is it based on the number of employees, or is it anything else? I am thinking of if its possible to bypass this by setting up consultancy company together with fellow contractors and therefor being a consultancy.

Possibly but there are so many challenges to this it's just not true. There has to be a market for you and it's got to work. In a vast majority of cases it won't. If you are trying to think about quick get arounds you need to think one step further to see if it's even viable.

dynamicsaxcontractor
7th September 2015, 07:35
Possibly but there are so many challenges to this it's just not true. There has to be a market for you and it's got to work. In a vast majority of cases it won't. If you are trying to think about quick get arounds you need to think one step further to see if it's even viable.

It's definitely time to think a step ahead, if this expense thing goes ahead I probably will have to turn down at least 50% of contracts offered. A new IR35 regime on top of that and I cant continue, or see very little point in doing so. Why should I travel around the country/Europe if I earn the same, or less as I could if taking on a perm role down the closest end client?