Any point in contracting after April 2016?

[olimor]

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]

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]

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]

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]

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]

Any point in contracting after April 2016?

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]

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?

That told me then.

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

[ShandyDrinker]

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]

No

Next.

[Intel]

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.