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View Full Version : What do you think will happen to agencies next April?



czakky
20th August 2015, 08:49
So, I'm after some thoughts and inputs on this, we've been bouncing idea's about here at work, and it would be interesting to hear what you guys think will happen.

This is based on the assumption that all of the changes that are currently being debated happen - no expenses if through an agency or umbrella, much stronger IR35 application, and dividend changes making contracting less financially rewarding.

We have 2 main idea's -

1. Rates go up significantly for contractors that take contracts involving overnight stays and weeks away from home; or contractors only consider local gigs where expenses are not that high (which causes all kinds of problems for clients in the arse end of nowhere)

Main concern here is that a lot of clients perceive contractors to be expensive anyway, and if I explained to them that my guys want a rate rise as they cannot claim expenses, they simply would not give a damn, and not change what they pay.

2. The entire model changes, and we charge an introductory fee (no idea how we would work this out, say 10% of the entire value of the contract?), and then we leave the contractual affairs between client and contractor to themselves

Only concerns with the 2nd model, is that for longer, higher value contracts, the fee would be very, very high, and if a contractor leaves part way through, or does not complete, then this would have to be refunded - but with no weekly time sheets to the agency, we would have no way of proving this. Awkward and potentially open to abuse. As well as this, another fee would have to be charged at renewal to keep the current level of profits in our business. Again, this is potentially awkward.

I guess the cynical ones will hope that these changes will kill agency contract recruitment, so I expect to hear that also.

So - what do people think? Either of the above model make sense, or is there another way that you can see this working? Or, have the Tories finally decided to kill contracting off for all but the very dedicated?

BrilloPad
20th August 2015, 08:55
I think contractors will whine and take the hit.

Hence I believe agencies will be unaffected.

cojak
20th August 2015, 08:58
There are more options than that.

Agencies will probably stay as they are...

3) Mass movement back into permiedom. Unlikely for hardcore contractors but possible for a large percentage of newbies or those who CBA any longer.

4)Those contractors that stay will not be inclined to work beyond a daily commute, making the contracting workforce less flexible.

Clients may not like using contractors and consider them expensive, but watch them whine when the market dries up and they get sub-par consultancies dropping in 'cheap' labour...

The good news may be that 3-4 years down the line when everyone realises that cheap may be expensive in the long run, the regs are relaxed. But that's just wishful thinking.

BrilloPad
20th August 2015, 09:03
The good news may be that 3-4 years down the line when everyone realises that cheap may be expensive in the long run, the regs are relaxed. But that's just wishful thinking.

+1

But I had hoped offshoring would be found to be bad 15 years ago.

eek
20th August 2015, 09:04
Sat up north I will have a pick of local contracts in what you call the arse end of nowhere (until they bring someone in on a tier 2)...

Rates will be higher because there will be about 8 companies after about 4 decent contractors (my speciality). Even C# devs will have a field day...

For reference I will automatically be rejecting Benton unless I get a parking space... Remember this contract gave me a guaranteed window seat in a full hot desk office...

Mind you current permie rates do look tempting I just don't want appraisals....

northernladuk
20th August 2015, 09:04
There are more options than that.

3) Mass movement back into permiedom. Unlikely for hardcore contractors but possible for a large percentage of newbies or those who CBA any longer.



I can't help thinking there is going to be three camps here. The hardcore that stick it through, the middle men that know a little bit and are in it for the money who will jump and the rafts of people that haven't a bleedin clue and will continue oblivious, completely ignored by HMRC again. Saying that I would imagine their accountants(!?) would spell it out to them at some point after the event and they follow the rest in the permiedom so maybe not as bigger group as I indicated.

SimonMac
20th August 2015, 09:13
I think there will be a move to stopping "resource gap" contractors, 2/3rd line support bods who are there because clients can't/won't hire permies. True contractors, consultants who are an expert in their field of specialty will continue to be engaged, and are already paid the big rates and can absorb the costs of travelling in their existing rates. My hotel and mileage is about 13% of my gross monthly invoice, I will whine but I will take the hit.

czakky
20th August 2015, 09:24
I think there will be a move to stopping "resource gap" contractors, 2/3rd line support bods who are there because clients can't/won't hire permies.

The grim reality is that this is a huge chunk of a lot of agencies billings per week.

It also makes very little sense - as an example, we do a lot of work with universities this time of year who need a temp help desk team to move the freshers in and sort out all the things they mess up. They typically hire 5-6 temp heads for 6 weeks to get everything smoothed out, and without this, they would suffer. Hiring perm would not be an option for them, after this time they have no work and would just have to sack them.

However, I do think you are right, as placing low pay/charge (I make £2 an hour on a £12 an hour support bod) just does not work with no expenses, clients will not pay more for this, and without expenses, its a pretty bad wage, going perm is better.

eek
20th August 2015, 09:28
The grim reality is that this is a huge chunk of a lot of agencies billings per week.

It also makes very little sense - as an example, we do a lot of work with universities this time of year who need a temp help desk team to move the freshers in and sort out all the things they mess up. They typically hire 5-6 temp heads for 6 weeks to get everything smoothed out, and without this, they would suffer. Hiring perm would not be an option for them, after this time they have no work and would just have to sack them.

However, I do think you are right, as placing low pay/charge (I make £2 an hour on a £12 an hour support bod) just does not work with no expenses, clients will not pay more for this, and without expenses, its a pretty bad wage, going perm is better.

Those 6 week hires won't be an issue next year. They just won't be able to remove expenses from their wages before the umbrella pays them. It may mean that the quality of people the uni gets may be worse but I doubt that would be the case. Its more likely they will just receive a smaller pay pocket...

The following year would be more difficult when the IR35 stuff comes in...

Personally I think the only solution will be a tier 2 type test. Show that its temporary or show that you can't find the resources with a standard permanent advert. Once you've done that IR35 doesn't apply

SimonMac
20th August 2015, 09:30
The grim reality is that this is a huge chunk of a lot of agencies billings per week.

It also makes very little sense - as an example, we do a lot of work with universities this time of year who need a temp help desk team to move the freshers in and sort out all the things they mess up. They typically hire 5-6 temp heads for 6 weeks to get everything smoothed out, and without this, they would suffer. Hiring perm would not be an option for them, after this time they have no work and would just have to sack them.

However, I do think you are right, as placing low pay/charge (I make £2 an hour on a £12 an hour support bod) just does not work with no expenses, clients will not pay more for this, and without expenses, its a pretty bad wage, going perm is better.

There are always going to be temps, but they do not really need to follow the "contractor" route, they will have to go down the PAYE route where they are employed by the agency

czakky
20th August 2015, 09:44
There are always going to be temps, but they do not really need to follow the "contractor" route, they will have to go down the PAYE route where they are employed by the agency

However, though the PAYE route at £12 an hour, a client is charged £17.09 an hour with me making a £2 margin, with an umbrella route, they are charged £14, with me making a £2 margin - so these changes just end up costing the end client more, with more paperwork on both sides.

So to make the £14 charge rate, which is what a lot of my end clients want for temp help desk, though PAYE I would pay a candidate £9.50. A nice pay cut, and the less you are paid, the more you will feel the effect of a pay cut.

My god I hate these changes.

SimonMac
20th August 2015, 09:48
However, though the PAYE route at £12 an hour, a client is charged £17.09 an hour with me making a £2 margin, with an umbrella route, they are charged £14, with me making a £2 margin - so these changes just end up costing the end client more, with more paperwork on both sides.

So to make the £14 charge rate, which is what a lot of my end clients want for temp help desk, though PAYE I would pay a candidate £9.50. A nice pay cut, and the less you are paid, the more you will feel the effect of a pay cut.

My god I hate these changes.

I assume the £12 a hour the temp gets how much goes in their pocket after all deductions including both sides of NI

diseasex
20th August 2015, 09:49
There are always going to be temps, but they do not really need to follow the "contractor" route, they will have to go down the PAYE route where they are employed by the agency

1. Competition will decrease (that's pretty sure as less contractors will be willing to travel / some will go permie instead of taking tax hit)
2. rates may increase due to above, and general shortage of skilled IT
3. Agencies wont change ..

Either way , good times coming

eek
20th August 2015, 09:55
1. Competition will decrease (that's pretty sure as less contractors will be willing to travel / some will go permie instead of taking tax hit)
2. offshoring and tier 2 may increase due to above, and general shortage of skilled IT
3. Agencies wont change ..

Either way , bad times coming

ftfy (eek in cynical mode)..

czakky
20th August 2015, 09:55
I assume the £12 a hour the temp gets how much goes in their pocket after all deductions including both sides of NI

How the temp manages this £12 is up to them - this is what is paid either to a limited Co that they run, or to a brolly that will then make deductions, I let my guys use any route they choose, its none of my business.

What I was trying to get at, is that to maintain current levels of pay, I would have to charge clients more, which at junior level, would not work.

I guess another way to see it, it to ask why on earth use a recruiter to fill jobs like these? I can throw a ball on Grainger Street and hit someone who can do these roles, the most sensible change would be for companies HR to get it together, and stop relying on recruiters to fill basic jobs....although this would not help me one bit!

diseasex
20th August 2015, 09:56
ftfy (eek in cynical mode)..

If offshorers wont increase their IQ somehow , there will always be demand for smart local people..
And by the time they increase their intelligence / education / skills (few generations at least) they wont be that competitive at all, just as china slowly gets expensive
Good times coming

BrilloPad
20th August 2015, 09:57
I guess another way to see it, it to ask why on earth use a recruiter to fill jobs like these? I can throw a ball on Grainger Street and hit someone who can do these roles, the most sensible change would be for companies HR to get it together, and stop relying on recruiters to fill basic jobs....although this would not help me one bit!

Its not really the recruiting part that is at issue. Its having an intermediary so that contractors cannot claim employee rights.

LondonManc
20th August 2015, 10:01
I can't see the Office Angels end of the market operating in the same way as the SME end and it shouldn't. The fact that it does is one of the things that have led to the Guardians of Old Money taking this blunderbus approach. HMG should give the interim employment industry a year or two to sort itself out based on operating guidelines and see where the land lies after that.

Mind you, with the consultancy firms extracting the urine with expenses, we're not going to be fighting on a level playing field any time soon.

czakky
20th August 2015, 10:02
Its not really the recruiting part that is at issue. Its having an intermediary so that contractors cannot claim employee rights.

A HR bod could quite easily engage contractors and then put them through an umbrella, which would save any fee paid to me, and would allow the expenses thing to be negated, as a saving in fee could be passed as a rate raise to the contractor. They just choose not to, and instead they...well, I often struggle to work out what some of them do!

eek
20th August 2015, 10:05
How the temp manages this £12 is up to them - this is what is paid either to a limited Co that they run, or to a brolly that will then make deductions, I let my guys use any route they choose, its none of my business.

What I was trying to get at, is that to maintain current levels of pay, I would have to charge clients more, which at junior level, would not work.

I guess another way to see it, it to ask why on earth use a recruiter to fill jobs like these? I can throw a ball on Grainger Street and hit someone who can do these roles, the most sensible change would be for companies HR to get it together, and stop relying on recruiters to fill basic jobs....although this would not help me one bit!

Grainger Street or Clayton Street. (for those that don't know Newcastle that Grainger Street sets the requirement barrier fairly low, Clayton street would imply anyone with a pulse).

TheFaQQer
20th August 2015, 10:20
1. Rates go up significantly for contractors that take contracts involving overnight stays and weeks away from home; or contractors only consider local gigs where expenses are not that high (which causes all kinds of problems for clients in the arse end of nowhere)

Main concern here is that a lot of clients perceive contractors to be expensive anyway, and if I explained to them that my guys want a rate rise as they cannot claim expenses, they simply would not give a damn, and not change what they pay.

2. The entire model changes, and we charge an introductory fee (no idea how we would work this out, say 10% of the entire value of the contract?), and then we leave the contractual affairs between client and contractor to themselves

Can't see either of those happening for agencies.

If you have to travel and stay over, then you will either (a) stop doing that; (b) increase the rate to compensate; or (c) already be on a high enough rate that you can suck it up.

I don't believe that clients are going to increase rates (certainly not in the short to medium term), because as far as they are concerned it's nothing to do with them - they need a flexible resource, so be flexible. So that leaves the market in certain areas drying up (good for those that already live in areas where people don't want to travel though), or sucking it up.

I suspect more of the latter than the former.

Milkyway
20th August 2015, 10:23
I thought there was going to be some hope at the end of the tunnel... but going through the various posts here I see this:

1. Clients won't budge for any rate increase etc., irrespective of what the law changes will be (its buyer's market)
2. Agencies won't change (many have asserted this), and why should they anyway. They don't want to charge more to their customers.
3. Contractors: I see most of us saying we will just whine and take the hit.

Great. If I was HMRC or HMG, I would simply put through all these changes (divi, T&S, IR35 complete change) as soon as possible and get the industry/contracting business model closed for ever, without any outcry etc... since its very very clear its just a "contractor's problem" now. As for clients - they don't give a toss about "top quality work" - so they will find cheap work force one way or the other, at their cost terms (through offshore, onshoring offshore people, etc.), agencies will do whatever clients want.

And the govt knows we (contractor - the sellers) will as usual blame it all on the foreigners :), and whine about it and carry on.

Go for it HMRC/HMG. Its all yours now!! Kill this market happily! :(
There is no way the contractor's forum or groups like IPSe etc. that can do anything about it.

LondonManc
20th August 2015, 10:26
Can't see either of those happening for agencies.

If you have to travel and stay over, then you will either (a) stop doing that; (b) increase the rate to compensate; or (c) already be on a high enough rate that you can suck it up.

I don't believe that clients are going to increase rates (certainly not in the short to medium term), because as far as they are concerned it's nothing to do with them - they need a flexible resource, so be flexible. So that leaves the market in certain areas drying up (good for those that already live in areas where people don't want to travel though), or sucking it up.

I suspect more of the latter than the former.

Or (d) downgrade your hotel and stick to offpeak travel where possible

DaveB
20th August 2015, 10:32
Depending on how it all shakes out my current thinking is that I will start quoting "Rate + T&S" for new gigs. This is just what the big consultancies do now anyway so brings things in line with them. My day rate is still a fraction of what they would charge to put in someone wth less experiance.

If push comes to shove I am one of those in a position to absorb the costs if I have to, but that doesn't mean I won't try and avoid that if I can.

diseasex
20th August 2015, 10:33
Or (d) downgrade your hotel and stick to offpeak travel where possible
As far as I know dividend increase is "sure" but they are still discussing T&S so by no means its decided? So what are we discussing here really?
Or something changed from last time I checked?

Milkyway
20th August 2015, 10:40
As far as I know dividend increase is "sure" but they are still discussing T&S so by no means its decided? So what are we discussing here really?
Or something changed from last time I checked?

Well, if you look at it from my point of view (ref: my post above), you will see that the T&S and IR35 sweeping changes, both can be passed as law easily without any big deal - since there is no concern from any of the main constituents of the market (i.e. Clients and Agencies). The only one to moan is the contractors themselves, and we are ready to suck it up and just continue moaning.

Honestly, if you were the HMG, do you think there is any incentive for you to not pass through these "discussion" materials into law?
I don't see one!

Anyway, the blame will be on the foreigners! :).. so what is the big deal! That will be their approach! And to TBH, if I were HMG, I would do the same!

LondonManc
20th August 2015, 10:41
As far as I know dividend increase is "sure" but they are still discussing T&S so by no means its decided? So what are we discussing here really?
Or something changed from last time I checked?

Read the OP. I did.

cojak
20th August 2015, 10:43
Depending on how it all shakes out my current thinking is that I will start quoting "Rate + T&S" for new gigs. This is just what the big consultancies do now anyway so brings things in line with them. My day rate is still a fraction of what they would charge to put in someone wth less experiance.

If push comes to shove I am one of those in a position to absorb the costs if I have to, but that doesn't mean I won't try and avoid that if I can.
Yep, and if you cap the T&S to a reasonable limit it will be no different to consultancies.

SueEllen
20th August 2015, 11:29
@czakky I've been called up by 2 agencies who use the second model but they mainly work in mainland Europe.

There must be contractual terms which means if the contractor is extended the agency gets more money.

SlipTheJab
20th August 2015, 11:34
Agree I am on 100 notes less a day now compared to my London Rate (my choice), bonus is I have a 5 second commute as I WFH, get to see my kids and am less stressed. If I do go back to London it will cost me 90 quid a day which I will factor into my rate x2 as its not just the money but time also, in fact not being able to claim it back means I probably won't bother.

LondonManc
20th August 2015, 11:53
Agree I am on 100 notes less a day now compared to my London Rate (my choice), bonus is I have a 5 second commute as I WFH, get to see my kids and am less stress free. If I do go back to London it will cost me 90 quid a day which I will factor into my rate x2 as its not just the money but time also, in fact not being able to claim it back means I probably won't bother.

Could potentially be the best future working model, barring the inevitable cabin fever that sets in about 4 months into pure wfh

sal
20th August 2015, 13:38
Wishful thinking here: How about the agencies cut their margins? If you charge £2/h for low skill bod why do you charge £5-10h for high skill bod? Presumably the amount of work you have to do is the same, yet you want a % cut....

And why on earth would the agency be entitled to a % of the ongoing contract if they are not doing any ongoing admin work, after the introduction?

Like it or not i believe the upcoming changes will have the result HMRC/Gov desire - a lot of the contractors that are indeed a disguised employees will move to permiedom where they belong. The rest will take a hit, some might be able to negotiate a rate increase based on the supply/demand in their area of expertise or geographical location.

In any case the Agencies will survive, like any parasites they live as long as the host lives and tehre will always be need for flexible work force be it ltd contractors, umbrella or agency temps.

czakky
20th August 2015, 13:55
Wishful thinking here: How about the agencies cut their margins? If you charge £2/h for low skill bod why do you charge £5-10h for high skill bod? Presumably the amount of work you have to do is the same, yet you want a % cut....


The £2 P/h is approx 14%, which about the average of what I charge clients, which means on a £80 per hour contract I'd charge £11 (napkin maths here!)

If you can't understand the difference in difficulty in finding someone to log and flog on the phones, and finding someone to build enterprise software, then you really have no grasp of how most of this works.

We charge a set margin as it just makes business simpler and more transparent - all my clients and contractors know my margins, I learnt a long time ago why hiding this is bad, it never goes well.

And as I have said before, if you do hate agents, do your own BD and find your own gigs. You do not have to use us in the days of Linkedin and mass social media.

sal
20th August 2015, 14:42
The £2 P/h is approx 14%, which about the average of what I charge clients, which means on a £80 per hour contract I'd charge £11 (napkin maths here!)

If you can't understand the difference in difficulty in finding someone to log and flog on the phones, and finding someone to build enterprise software, then you really have no grasp of how most of this works.

We charge a set margin as it just makes business simpler and more transparent - all my clients and contractors know my margins, I learnt a long time ago why hiding this is bad, it never goes well.

And as I have said before, if you do hate agents, do your own BD and find your own gigs. You do not have to use us in the days of Linkedin and mass social media.

I understand that in some cases it's more difficult to find the high skill bod, the point is once the contracts is signed your work volume is exactly the same regardless, yet you are charging 5 times more. So you believe that spending say 16h to find a candidate for 1 year on a 400pd which is about 90k is worth the 10%+ or 9k+ you charge :yay:

Don't take it personal, I don't mind the agents that are doing their job professionally (and you might very well be one of these), unfortunately they are a minority. On the other hand I do hate the rest 90%+ of the scum that wastes my time with cold calls, offers for permie jobs, asking for 2 references and false promises that my CV was sent to the client, yet demands 10k / year for the privilege...

CloudWalker
20th August 2015, 14:52
"Agencies will find a way"

http://tehelkahindi.com/wp-content/uploads/2014/08/richard-attenborough.jpg

Danglekt
20th August 2015, 15:28
i think agencies will need to cut their cloth according to the income, the days of selling in cheap labour that should be perm will probably end, so they will need to focus on selling in higher skilled labour. Assuming the same costs can be spread over a lot less work won't fly, so they will have to shrink to match.

Personally I have never used an agency, and invest my time in keeping the client sweet and building my reputation - after all that is the product I sell.

d000hg
20th August 2015, 16:48
If you can't understand the difference in difficulty in finding someone to log and flog on the phones, and finding someone to build enterprise software, then you really have no grasp of how most of this works.Is that because "C#" breaks your CV keyword-search and you have to look through them manually?

TheFaQQer
20th August 2015, 17:07
Depending on how it all shakes out my current thinking is that I will start quoting "Rate + T&S" for new gigs. This is just what the big consultancies do now anyway so brings things in line with them. My day rate is still a fraction of what they would charge to put in someone wth less experiance.

If push comes to shove I am one of those in a position to absorb the costs if I have to, but that doesn't mean I won't try and avoid that if I can.

As the T&S consultation stands now, it won't make any difference how you bill for them - the client can pay all the expenses for you directly for all it matters. Because your travel and subsistence will need to go on your P11D and be declared as a benefit in kind - so separate them out is fine, but it's not going to help you as an individual get the money out without paying PAYE and NI on it at some stage.

BolshieBastard
20th August 2015, 17:32
Changes wont make a difference to agencies. or, even clients imo so people who think rates will \ should go up are dreaming.

But, I think people are missing the obvious here and that's too many contractors just wont be bothered or affected.

They wont be bothered because they are effectively permietractors. There are plenty of contractors who've been at a client site for more than 2 years so cannot claim travel and subsistence. They wont be affected so wont campaign to retain T&S.

Of the remaining contractors, many, in my experience, dont travel more than 30 - 40 miles to the client site. I know permies who travel that distance every day and they dont get travel expenses.

In my last couple of contracts with major blue chip clients working on big projects, a straw poll suggested that only 20% of the contractors travelled 50 miles or more to work. in my current place, out of 6 contractors, 4 live within 25 miles of the client site.

In effect, something like 80% of contractors wouldnt 'suffer' financially if T&S was no longer claimable. Admittedly, its very much a rough poll but has been pretty constant through my contracting career.

darrylmg
20th August 2015, 21:58
Being ignorant as I am, I thought that the T&S rules were also going to apply to those nasty offshore visa type people?
Don't they come through consultancies who usually get tax relief on their T&S?
Would someone please explain how these people could be affected by all these potential new rules and regs?

cojak
21st August 2015, 05:33
i think agencies will need to cut their cloth according to the income, the days of selling in cheap labour that should be perm will probably end, so they will need to focus on selling in higher skilled labour. Assuming the same costs can be spread over a lot less work won't fly, so they will have to shrink to match.

Personally I have never used an agency, and invest my time in keeping the client sweet and building my reputation - after all that is the product I sell.

If that's the case there may well be quite a bit of shrinkage in the recruitment market, which may mean the OP needs to consider a new choice of career.

LisaContractorUmbrella
21st August 2015, 06:47
How the temp manages this £12 is up to them - this is what is paid either to a limited Co that they run, or to a brolly that will then make deductions, I let my guys use any route they choose, its none of my business.

What I was trying to get at, is that to maintain current levels of pay, I would have to charge clients more, which at junior level, would not work.

I guess another way to see it, it to ask why on earth use a recruiter to fill jobs like these? I can throw a ball on Grainger Street and hit someone who can do these roles, the most sensible change would be for companies HR to get it together, and stop relying on recruiters to fill basic jobs....although this would not help me one bit!

This is pretty much the root of the problem. HMRC don't like the fact that lots of low paid workers have been moved out of employment to brollies or PSC's as it's meant that the workers loses employment rights but they also gain tax relief on travel and subsistence and the numbers doing so far exceed the numbers that the Government originally intended to have that advantage. So, in an attempt to move people back to permiedom and to increase the tax take by drastically reducing the numbers who'll be eligible for tax relief they have decided to apply the SDC test. Having obviously considered that it was a good idea they are also planning to apply it to IR35. If clients could be persuaded to keep lower paid workers on their own books we probably wouldn't be in this position but with employment costs as they are it's really hardly surprising.

LisaContractorUmbrella
21st August 2015, 06:59
I thought there was going to be some hope at the end of the tunnel... but going through the various posts here I see this:

1. Clients won't budge for any rate increase etc., irrespective of what the law changes will be (its buyer's market)
2. Agencies won't change (many have asserted this), and why should they anyway. They don't want to charge more to their customers.
3. Contractors: I see most of us saying we will just whine and take the hit.

Great. If I was HMRC or HMG, I would simply put through all these changes (divi, T&S, IR35 complete change) as soon as possible and get the industry/contracting business model closed for ever, without any outcry etc... since its very very clear its just a "contractor's problem" now. As for clients - they don't give a toss about "top quality work" - so they will find cheap work force one way or the other, at their cost terms (through offshore, onshoring offshore people, etc.), agencies will do whatever clients want.

And the govt knows we (contractor - the sellers) will as usual blame it all on the foreigners :), and whine about it and carry on.

Go for it HMRC/HMG. Its all yours now!! Kill this market happily! :(
There is no way the contractor's forum or groups like IPSe etc. that can do anything about it.

And that's what HMRC are banking on - that all this will go through without a fuss. They told us in the last meeting that we had with them that contractors don't care or can't be bothered - only 3 responded to the original consultation on T&S - you're seen as an easy target. What they want from you is facts and figures to demonstrate how this will really affect you and the industry not a load of whining and complaining that they know will be replaced with apathy and acceptance after a couple of months.

We asked them for something we could put out in a press release that would encourage contractors to respond and they declined which came as no great surprise. So, we decided to do it ourselves and put together a survey which would demonstrate the damage that these proposals would cause - after a couple of weeks we've had 650 responses. Eek did the same thing on here and has had 100's of responses.

So, don't give up and don't think that things can't change! Ok, there's a chance that none of this will make a difference and that HMG and HMRC will ignore us completely but I'm damned if I'll see this industry go down without a fight :fight:

eek
21st August 2015, 07:32
And that's what HMRC are banking on - that all this will go through without a fuss. They told us in the last meeting that we had with them that contractors don't care or can't be bothered - only 3 responded to the original consultation on T&S - you're seen as an easy target. What they want from you is facts and figures to demonstrate how this will really affect you and the industry not a load of whining and complaining that they know will be replaced with apathy and acceptance after a couple of months.

We asked them for something we could put out in a press release that would encourage contractors to respond and they declined which came as no great surprise. So, we decided to do it ourselves and put together a survey which would demonstrate the damage that these proposals would cause - after a couple of weeks we've had 650 responses. Eek did the same thing on here and has had 100's of responses.

So, don't give up and don't think that things can't change! Ok, there's a chance that none of this will make a difference and that HMG and HMRC will ignore us completely but I'm damned if I'll see this industry go down without a fight :fight:

Likewise unlike IPSE I'm not coming up with crap ideas and pretending it will fix all problems.

On the T&S consultation

Unlike IPSE I always thought even before Lisa said as much that HMRC need actual facts to show them the size of the problem, got those.
The suggesting has a fundamental flaw in it so we highlight that and point out that the current suggesting will fall totally foul of the law
However as we think we know what the actual purpose is I may have a solution that allows them to fix 2 without losing the entire purpose of the bill.

Now the IR35 discussion document is far harder as I'm still trying to work out what scenarios create "self-employed" people... And looking at the discussion in the FLC threads both here and on the IPSE fanfest I need to try to identify the routes / reasons in which people become self-employed, weigh up how much that would annoy the general public / HMRC and then try to identify simple tests that HMRC can use to say you meet that route / reason so its valid / bogus...

SDC is a sledgehammer as HMRC think they have no other option. Lets give them another option...

eek
21st August 2015, 07:33
Or conversely they put on a local bus or taxi and pay the expenses themselves - Collect a few permies on the way. I've done a few gigs where the client pre-booked all my hotel and travel and paid it themselves. How do you tax that one? or have a travel service option on the agency contract.

That is how current clientco works if you are organised. How do you know how much to claim when you never see the invoice....

eek
21st August 2015, 07:41
Or write on the P11D if you don't transact any money through your limited co?

That's what I meant...

DaveB
21st August 2015, 08:09
As the T&S consultation stands now, it won't make any difference how you bill for them - the client can pay all the expenses for you directly for all it matters. Because your travel and subsistence will need to go on your P11D and be declared as a benefit in kind - so separate them out is fine, but it's not going to help you as an individual get the money out without paying PAYE and NI on it at some stage.

Not directly, no. What it will do is allow me to effectively raise my rate without raising the headline number. At worst I can add expenses to the day rate and offset the additional tax, rather than paying T&S out of the day rate end then laying tax on it as well. If I can set the T&S at cost + tax margin then I'm no worse off than I was. The numbers would need working on but a capped rate of £50-£60 per day for travel and accommodation costs doesn't look too bad. Most places I've worked have capped expenses costs higher than that for their permies. Even public sector agencies tend to come in at around £80 per night for hotel accommodation. I can certainly do better than that.

czakky
21st August 2015, 08:14
If that's the case there may well be quite a bit of shrinkage in the recruitment market, which may mean the OP needs to consider a new choice of career.

To be honest the shrinkage is looking like a possibility, things have changed a lot even in the last 2 years, I've gone from having very few roles and a ton of candidates available, to having a ton of roles that I can't fill as everyone even half decent has a contract now. On that note, anyone want a gig writing ruby on rails in the North East, or want to go and re-work the army's internal systems in APEX in Hampshire? (although you'll be working on ARMYNET - as a previous end user, its a train wreck)

I do think that these changes will well and truly be the end of the golden age of recruitment, and I can see them hurting my take home in a number of ways - not cool.

Oh, and as for C# breaking my search tool, that's not the case - finding a developer worth a damn that's not in a contract that will work in some of the locations my clients are in is. Most of the time, the only people on job boards need visa's and/or are awful, and if they don't/aren't, they get an offer close to home and won't go and live in the middle of nowhere.

Thought on this - as it's going to hurt the whole IT industry, and everyone in the supply chain to it due to skills issues, would it be worth asking clients for input on this? HMRC can ignore contractors quite easily, but would they ignore the thousands of businesses that rely on them to deliver work?

eek
21st August 2015, 08:17
To be honest the shrinkage is looking like a possibility, things have changed a lot even in the last 2 years, I've gone from having very few roles and a ton of candidates available, to having a ton of roles that I can't fill as everyone even half decent has a contract now. On that note, anyone want a gig writing ruby on rails in the North East, or want to go and re-work the army's internal systems in APEX in Hampshire? (although you'll be working on ARMYNET - as a previous end user, its a train wreck)

I do think that these changes will well and truly be the end of the golden age of recruitment, and I can see them hurting my take home in a number of ways - not cool.

Oh, and as for C# breaking my search tool, that's not the case - finding a developer worth a damn that's not in a contract that will work in some of the locations my clients are in is. Most of the time, the only people on job boards need visa's and/or are awful, and if they don't/aren't, they get an offer close to home and won't go and live in the middle of nowhere.

Thought on this - as it's going to hurt the whole IT industry, and everyone in the supply chain to it due to skills issues, would it be worth asking clients for input on this? HMRC can ignore contractors quite easily, but would they ignore the thousands of businesses that rely on them to deliver work?

I've never understood why Sage One was allowed to be written in Ruby (its the north east I know the market as well as you do)..

And yes its essential for clients to complain. The problem is identifying people in a position to understand the problem and are also in a position to be both willing and able to write suitable letters on behalf of the company...

eek
21st August 2015, 08:21
What is interesting is when I started contracting the T&S rules for home to work travel were as proposed - no allowance. The two year limit was brought in by the Tories in the 90's as there was a whole series of rules around how much you could claim when you went to a different site than your "normal" working site. For car commuting it does make a company car look a lot more attractive. Switching into paying private petrol might be worth a look.

Can you point me at the history? Its nice to attach the history of the situation to the document it shows your comment has done the ground work...

I should remember that but probably started later than the change occurred (95) and it didn't matter as I went from working in London to contracting in London the commute was identical.

cojak
21st August 2015, 08:23
Thought on this - as it's going to hurt the whole IT industry, and everyone in the supply chain to it due to skills issues, would it be worth asking clients for input on this? HMRC can ignore contractors quite easily, but would they ignore the thousands of businesses that rely on them to deliver work?
But do those businesses resent relying on contractors? They may be just expecting a cheaper resource once all the dust settles.

allaboutthebenjis
21st August 2015, 08:29
My 'home' is in Edinburgh, but at gig in Manchester for last 6 months/next 6 months racking up £2.5k+ in T&S per month. That will absolutely not be viable post-April if proposed changes go through on T&S.

I will have to rely on getting a good gig in Edinburger instead which should not be the end of the world, I know there are loads of T&S reliant bods working all over Edinburger wo would have to return dahn sath

eek
21st August 2015, 08:33
My 'home' is in Edinburgh, but at gig in Manchester for last 6 months/next 6 months racking up £2.5k+ in T&S per month. That will absolutely not be viable post-April if proposed changes go through on T&S.

I will have to rely on getting a good gig in Edinburger instead which should not be the end of the world, I know there are loads of T&S reliant bods working all over Edinburger wo would have to return dahn sath

Have you filled in the surveys http://goo.gl/forms/O2O4WhscV4 and https://www.surveymonkey.com/r/AUCAEConDoc ?

eek
21st August 2015, 08:34
But do those businesses resent relying on contractors? They may be just expecting a cheaper resource once all the dust settles.

Unlikely. Most of the North East companies I know of (except Capita) have clear cut rules for contractor instead of permie...

northernladuk
21st August 2015, 08:38
Maybe we should start a swap shop site. I see so many posts where people are travelling halfway across the country for gig's. So many of us must pass each other going in the opposite direction to the same type of gig. I'll take yours in my home town and you can have mine in your town. We could place each other as subs and have and IR35 is sorted... Oh.. Hang on :(

MrMarkyMark
21st August 2015, 09:57
travelling halfway across the country for gig's. So many of us must pass each other going in the opposite direction to the same type of gig.

Capita deliberately do this with their own staff, as I said on another post.
They have their own travel agency and pass this cost all on to the client.

Danglekt
21st August 2015, 10:03
Just a small point, but contractors can and do work outside of IT.

eek
21st August 2015, 11:42
EMPLOYEE TRAVEL & SUSISTENCE: INLAND REVENUE CONSULTS | News | Local Government Chronicle (http://www.lgcplus.com/employee-travel-and-susistence-inland-revenue-consults/1541654.article) - Looking at this it must have been after the consultation in 1996 - So 1997?

Some serious irony here... :D

Would be worth an FOI to see what was said as a result of this consultation - And use the same arguments, bearing in mind this allowed the 24 months. In my opinion this should be the type of thing that would be a winner in a court case.

or just write ...

"Copies of the consultative document are available by post, price £3 (post free) from: The Inland Revenue Reference Library South West Wing Bush House Strand London WC2B 4RD."

hang on ... just searching the archive ....

Ok, looks like someone has beaten you to it ...

Lawspeed leads AEMC response to Treasury consultation on contractors

Interesting argument - "This same consultation claimed ten years ago that there would be no loss to the exchequer in granting relief to site-based workers, where the Treasury now claims, without apparent basis, it is costing £300m" - Now £400m to account for inflation I guess....

Other interesting numbers.

83% of contractors said the tax relief on travel expenses was important to them
27% of contractors said they would seek permanent employment if tax relief on travel expenses was removed
Only 29% of the 27% of contractors who said they would seek permanent employment said their existing client would offer them the option of direct employment
90% of contractors said it would be a loss if umbrella companies ceased to exist and there was no alternative model of employment.

Thank you very much. So this was implemented in 1996, discussed in 2008/9 but withdrawn and now implemented again now...

LisaContractorUmbrella
21st August 2015, 12:10
EMPLOYEE TRAVEL & SUSISTENCE: INLAND REVENUE CONSULTS | News | Local Government Chronicle (http://www.lgcplus.com/employee-travel-and-susistence-inland-revenue-consults/1541654.article) - Looking at this it must have been after the consultation in 1996 - So 1997?

Some serious irony here... :D

Would be worth an FOI to see what was said as a result of this consultation - And use the same arguments, bearing in mind this allowed the 24 months. In my opinion this should be the type of thing that would be a winner in a court case.

or just write ...

"Copies of the consultative document are available by post, price £3 (post free) from: The Inland Revenue Reference Library South West Wing Bush House Strand London WC2B 4RD."

hang on ... just searching the archive ....

Ok, looks like someone has beaten you to it ...

Lawspeed leads AEMC response to Treasury consultation on contractors

Interesting argument - "This same consultation claimed ten years ago that there would be no loss to the exchequer in granting relief to site-based workers, where the Treasury now claims, without apparent basis, it is costing £300m" - Now £400m to account for inflation I guess....

Other interesting numbers.

83% of contractors said the tax relief on travel expenses was important to them
27% of contractors said they would seek permanent employment if tax relief on travel expenses was removed
Only 29% of the 27% of contractors who said they would seek permanent employment said their existing client would offer them the option of direct employment
90% of contractors said it would be a loss if umbrella companies ceased to exist and there was no alternative model of employment.

Good find :smile This kind of backs up what HMRC said - they didn't think that it would have any impact because there weren't that many contractors - now there's loads (allegedly) and it has an impact.

Danglekt
21st August 2015, 12:38
Looks like HMRC implement a relaxation of the rules, followed by a tightening of the rules. Followed by a consultation to relax/tighten the rules. They must pull it out of a drawer dust it off and re-issue.

The wheel spins on and on till they pick up the gold plated pension.

Unlike contractors who recycle our experiences time and again, and get paid better than most public sector bods can dream of. :tongue

allaboutthebenjis
24th August 2015, 10:48
Have you filled in the surveys http://goo.gl/forms/O2O4WhscV4 and https://www.surveymonkey.com/r/AUCAEConDoc ?

Have now :)

Sausage Surprise
24th August 2015, 13:41
So - what do people think? Either of the above model make sense, or is there another way that you can see this working? Or, have the Tories finally decided to kill contracting off for all but the very dedicated?

I asked a contractor colleague what he thought of the new tax dividend and the T&S "squeeze" and how it may affect agencies...
He had no idea what I was on about. Neither did the other 2 I asked. :tumble:

eek
24th August 2015, 13:47
I asked a contractor colleague what he thought of the new tax dividend and the T&S "squeeze" and how it may affect agencies...
He had no idea what I was on about. Neither did the other 2 I asked. :tumble:

And you are surprised by that.

The people post on CUK will be the most informed contractors in the market. Most won't know anything until their accountants say you can't claim expenses anymore and then sorry but you have been under IR35 since April 5th 2017...

cojak
24th August 2015, 13:50
And you are surprised by that.

The people post on CUK will be the most informed contractors in the market. Most won't know anything until their accountants say you can't claim expenses anymore and then sorry but you have been under IR35 since April 5th 2017...

The most savvy accountants ought to give their clients a month's notice (to keep them legal), so they'll probably find out in March 2017...

OrangeSquash
24th August 2015, 13:50
Same where I am. Spoken to a number of relatively long term contractors in the Finance sector, most don't have a clue what's going on....

northernladuk
24th August 2015, 13:51
The people post on CUK will be the most informed contractors in the market.

This alone is reason enough to have me running for the safe hills of permiedom.

eek
24th August 2015, 13:57
This alone is reason enough to have me running for the safe hills of permiedom.

Worrying isn't it?

Danglekt
24th August 2015, 14:24
This alone is reason enough to have me running for the safe hills of permiedom.

NLUK, what is it like to be the best, of the best, of the best?


:happy

SlipTheJab
24th August 2015, 14:24
Spoke to mate of mine whose been commuting to the same Investment Bank in London from the Midlands for 3 years now and claiming the travel. His response when I told him about the 24 months rule was that his accountant hasn't told him he can't claim so he's going to carry on :eek

SimonMac
24th August 2015, 14:28
Spoke to mate of mine whose been commuting to the same Investment Bank in London from the Midlands for 3 years now and claiming the travel. His response when I told him about the 24 months rule was that his accountant hasn't told him he can't claim so he's going to carry on :eek

There are many people like that, a guy here use a IoM scheme that returns him about 92%, the things is a majority of people will get away with it, so the rest will try

LondonManc
24th August 2015, 14:42
nluk, what is it like to be the best, of the best, of the best?


:happy

with honours!!!!

eek
24th August 2015, 14:49
There are many people like that, a guy here use a IoM scheme that returns him about 92%, the things is a majority of people will get away with it, so the rest will try

Can you be security cleared when bankrupt....

SimonMac
24th August 2015, 14:56
Can you be security cleared when bankrupt....

Yes you can

eek
24th August 2015, 14:59
Yes you can

Least he'll keep working then...

SimonMac
24th August 2015, 15:40
Least he'll keep working then...

He will need to to pay his tax bill

SueEllen
24th August 2015, 20:42
Just a small point, but contractors can and do work outside of IT.

It's not a small point but most people on this board are IT contractors.

I do know and have met contractors in other industries plus there are a few on this board.

Unfortunately if these people don't answer the consultation and indicate like IT and engineering bods that there is a skills shortage in their industry, than HMRC aren't going to listen.

Andy Hallett
27th August 2015, 09:58
This is my view own view and does not necessarily reflect the views of SThree

The HMRC have been on a march over the last few years to increase their tax take on the flexible labour market. There has been frustration from the revenue that contractors, effectively doing permie type roles, have had the advantage of paying lower percentages of tax through exotic schemes, T&S and dividend strategies.

If you look at what they have done, it resembles a plan!

Offshore Intermediaries > Onshore Intermediaries > Data Collection > Level T&S > Level Divs > Enforce IR35 > Possibly next step is to introduce direct deductions from clients agencies / introduce chain law

I am not sure that the intended target are the sort of folk who frequent this board if I am honest. The rump of their take will be in the truly 'disguised employee' type folk who are Limited Company teachers, order packers and postman - we will all just get caught up in the crossfire. I think whatever form these changes take it will see a fragmentation of the flexible labour market with the lower paid contractors moving in to Temporary or Fixed Term PAYE structures.

So where does that leave the traditional contractors? I think you will be ok but everyone will have to adapt. In a lot of senses contractors haven't helped themselves in recent years, claiming to be outside of IR35 and then seeking protection under the Employment Agency Regulations looks like a paradox too far in terms of demonstrating independence, and whilst currently all legally correct, has served to stir the beast. Going forward I think that we will move to a much more project based world (think back to when IR35 first came in) and less time and materials security.

Definitions are incredibly important as well, fundamentally what is the difference between a large recruitment company providing sub-contract services or a large consultancy. I suspect we have a bigger number in this category than the majority, yet they will be exempted from the plans.

In my role as Commercial Director for the group I see lots of different models across the globe, and in all countries there is a vehicle for legitimate freelancers to work and receive a premium for their enhanced skills and flexibility. In answer to the original question agencies (and contractors) will all have to adapt, but that's evolution...

LisaContractorUmbrella
27th August 2015, 10:21
This is my view own view and does not necessarily reflect the views of SThree

The HMRC have been on a march over the last few years to increase their tax take on the flexible labour market. There has been frustration from the revenue that contractors, effectively doing permie type roles, have had the advantage of paying lower percentages of tax through exotic schemes, T&S and dividend strategies.

If you look at what they have done, it resembles a plan!

Offshore Intermediaries > Onshore Intermediaries > Data Collection > Level T&S > Level Divs > Enforce IR35 > Possibly next step is to introduce direct deductions from clients agencies / introduce chain law

I am not sure that the intended target are the sort of folk who frequent this board if I am honest. The rump of their take will be in the truly 'disguised employee' type folk who are Limited Company teachers, order packers and postman - we will all just get caught up in the crossfire. I think whatever form these changes take it will see a fragmentation of the flexible labour market with the lower paid contractors moving in to Temporary or Fixed Term PAYE structures.

So where does that leave the traditional contractors? I think you will be ok but everyone will have to adapt. In a lot of senses contractors haven't helped themselves in recent years, claiming to be outside of IR35 and then seeking protection under the Employment Agency Regulations looks like a paradox too far in terms of demonstrating independence, and whilst currently all legally correct, has served to stir the beast. Going forward I think that we will move to a much more project based world (think back to when IR35 first came in) and less time and materials security.

Definitions are incredibly important as well, fundamentally what is the difference between a large recruitment company providing sub-contract services or a large consultancy. I suspect we have a bigger number in this category than the majority, yet they will be exempted from the plans.

In my role as Commercial Director for the group I see lots of different models across the globe, and in all countries there is a vehicle for legitimate freelancers to work and receive a premium for their enhanced skills and flexibility. In answer to the original question agencies (and contractors) will all have to adapt, but that's evolution...

Because a recruitment company's business, however large they may be, is 'substantially in the supply of Labour' - that's the qualifier that HMRC are using in the consultation document.

So, Andy, do you think that your clients will be happy to provide a written statement that a contractor in a particular role will, at no point during the duration of that role, be subject to the right of supervision or direction or control and that they relinquish the right to exercise any one of the three? Be interested to get an agency (albeit not endorsed by SThree) opinion

Andy Hallett
27th August 2015, 10:37
Because a recruitment company's business, however large they may be, is 'substantially in the supply of Labour' - that's the qualifier that HMRC are using in the consultation document.

You are assuming that the agency model will stay under that definition.


So, Andy, do you think that your clients will be happy to provide a written statement that a contractor in a particular role will, at no point during the duration of that role, be subject to the right of supervision or direction or control and that they relinquish the right to exercise any one of the three? Be interested to get an agency (albeit not endorsed by SThree) opinion

If you assume you first point then clients will have a choice, adapt or pay more. In my experience they will adapt. It is a symbiotic relationship between Client, Agency and Contractor.

psychocandy
27th August 2015, 13:06
1. Competition will decrease (that's pretty sure as less contractors will be willing to travel / some will go permie instead of taking tax hit)
2. rates may increase due to above, and general shortage of skilled IT
3. Agencies wont change ..

Either way , good times coming

Disagree.

What I think will happen will be:-

1) Rates will not change. Clients already think its expensive so won't care about the reasons for paying more.

2) There will be less candidates for contractors in remote areas because it won't be worth it to stay over for a lot of people. Those of us in these remote areas will be happy.

2) Clients will then whinge that they can't get anyone. Nothing will change.

3) Agents will carry on regardless - possibly having to work a bit harder to find local candidates.

In a way, won't affect me as much as others. I never take gigs that I can't commute to daily. So, even though there's some affect its not as bad as others who stay over.

The Spartan
27th August 2015, 14:03
In a way, won't affect me as much as others. I never take gigs that I can't commute to daily. So, even though there's some affect its not as bad as others who stay over.

We don't exactly live in a place known for being a contracting hotbed :laugh

Current gig is my first near home in 4 years

MicrosoftBob
27th August 2015, 14:18
It will certainly increase the desire for home working on contracts, and that's one thing clients often will negotiate over

The Spartan
27th August 2015, 14:27
It will certainly increase the desire for home working on contracts, and that's one thing clients often will negotiate over

I certainly hope so, it'd make it a lot easier for me if I could just work from the home office for the majority of the contract(s).

psychocandy
27th August 2015, 15:13
We don't exactly live in a place known for being a contracting hotbed :laugh

Current gig is my first near home in 4 years

This is true matey. But I think Im slightly closer to the 'Dark Place' than you are..... :-)

Maybe I'm lucky then - never had to take a gig where I stayed away more than the odd night. (And 2 in the last five years have been in the homeland)

psychocandy
27th August 2015, 15:14
I certainly hope so, it'd make it a lot easier for me if I could just work from the home office for the majority of the contract(s).

Perfect. Jeremy Kyle, Loose women, quick kip, Homes under the Hammer......

Contreras
27th August 2015, 17:16
So where does that leave the traditional contractors? I think you will be ok but everyone will have to adapt. In a lot of senses contractors haven't helped themselves in recent years, claiming to be outside of IR35 and then seeking protection under the Employment Agency Regulations looks like a paradox too far in terms of demonstrating independence, and whilst currently all legally correct, has served to stir the beast. Going forward I think that we will move to a much more project based world (think back to when IR35 first came in) and less time and materials security.

Andy, Thank you for sharing your perspective on this. The conclusion emboldened above would not be a bad thing IMHO, though I'm curious how you arrive at that because to the rest of us collectively I think the future looks very uncertain at the moment. Also what changes can you foresee to the way client HR and 'employment' agencies will handle the engagement of contractors in future compared to now?

eek
27th August 2015, 17:20
Andy, Thank you for sharing your perspective on this. The conclusion emboldened above would not be a bad thing IMHO, though I'm curious how you arrive at that because to the rest of us collectively I think the future looks very uncertain at the moment. Also what changes can you foresee to the way client HR and 'employment' agencies will handle the engagement of contractors in future compared to now?

I think the answer is they don't know but a way will be found and very rapidly that way will become the industry standard...

SlipTheJab
27th August 2015, 18:29
Agree with the WFH aspect, a good internet connection and tools like Skype/WebEx etc make it easier. I'm currently WFH pretty much full time and only go into the office when I need or choose to. Commute is 5 seconds and T&S costs negligle :-)

Yonmons
1st September 2015, 12:05
When/IF T&S goes for Contractors thats me done travelling, only local gigs from then on. Over the 15 yrs I have been contracting I have seen rates consistantly fall. I am with a large Corporate Bank at the moment, 4th time i have contracted here, each time on a lower rate. In fact the gig I am on at the moment was being off shored until the team of 4 agreed to cut cost, 2 contractors jumped ship and went permie locally, the remaining 2 took a rate cut, got overworked and I was invited back. I commute 108 miles a day in my car, spend 9rs on site, with a 3hr plus commute a day. I also get my sad aris out of my pit at 4.20 a.m. to get here for a 6.30 start. the only thing that got me here was the 45ppm, and that wont last long at this rate before I hit 10,000 and it drops to 20, I also claim the £10 per day Subs, (2 meals) I am running right on the edge of it being worth while. If it wasnt for the T&S I wouldnt be doing it. Course HMRC think we are all twisting little sods ragging the system. Getting something for nothing that a permies dont get. Well I for one dont know any permies here commuting 108 miles a day.
Next job to fill in the survey. I feel that the way this government and HMRC are going we may well be drinking in the last chance saloon. We are easy targets ripe for the taking.

SueEllen
1st September 2015, 12:08
@Yonmons it's worth writing to your MP about the T&S.

IPSE has a letter but to be honest you should edit to concentrate on T&S and to point out that the work would go abroad.

ASB
1st September 2015, 14:55
the only thing that got me here was the 45ppm, and that wont last long at this rate before I hit 10,000 and it drops to 20, I also claim the £10 per day Subs, (2 meals)

Obviously you haven't been in the same geographic location for 2 years but impact:-

Currently you get - in effect - to spend 58.60/per day of gross income in order to do the role.

If you are operating low salary/high dividend then it will be 74 to produce that income. So that is 15 quid a day worse off.

If inside IR35/brolly and a standard rate taxpayer then it will be about 98. 40 quid a day worse off.

As a 40% tax payer the it will be about 55 quid a day worse off.

That's quite a big change, and before factoring in new dividend tax or forced into IR35.

That level of change is bound to make quite a lot of people question whether they should perhaps do something else.

=======================

Edit. Checking it on a salary calculation it's not that bad.

Edit: Ran the calculations in a different way, still pretty awfult butnot so bad.

Assumption, salaried and total billing 80k, expenses 12,500.

With T+S

Exps: 12,500
Er's Ni: 7201
Salary: 60,300

Net 42,300


No T+S:

Er's NI 8717
Salary 71280

Net Salary in hand 48,688
After expenses 36,188


So, worst case likely to be 6,200 a year worse off. Still pretty chunky though.

Yonmons
3rd September 2015, 09:43
That makes quite horrendous reading !

northernladuk
3rd September 2015, 10:14
£10 a day for two meals? You've applied for dispensation?

That's a hell if day! I'd only do that carry on for the top end of my rate!!

The Spartan
3rd September 2015, 10:19
£10 a day for two meals? You've applied for dispensation?

That's a hell if day! I'd only do that carry on for the top end of my rate!!

Depending on where you are £10 isn't exactly a lot NLUK

northernladuk
3rd September 2015, 10:26
Depending on where you are £10 isn't exactly a lot NLUK

Indeed but the £10 receipted for two meals needs dispensation doesn't it and I didn't think that was easy to get nowadays. Just wondering if the OP was claiming dispensation rates without it. Minor point really.

The Spartan
3rd September 2015, 10:43
Indeed but the £10 receipted for two meals needs dispensation doesn't it and I didn't think that was easy to get nowadays. Just wondering if the OP was claiming dispensation rates without it. Minor point really.

Yeah I wouldn't claim it if I didn't have receipts, I always tend to stick to receipted amounts when claiming.

GB9
3rd September 2015, 18:22
You are assuming that the agency model will stay under that definition.



If you assume you first point then clients will have a choice, adapt or pay more. In my experience they will adapt. It is a symbiotic relationship between Client, Agency and Contractor.

I can see 6 months of absolute chaos and quite possibly few roles available until everything settles.

Some clients will want d&c, however, given the option of that or additional cost, many will go for the cheaper option. Many clients I have worked for don't want additional employees or the overhead involved in managing them. The easy way to avoid this would be no d&c.

I can also see a situation whereby clients choose d&c, end up paying employers NI and attempt to drop rates to compensate. At the same time contractors will be looking for increased rates to compensate for dividend tax. And quite a few clients will offer more fixed term contracts, the arse-end of the contract market.

I won't be able to take roles down south, and vice versa for others.

If someone doesn't get a grip then this whole shake up has the potential to be one huge ....choose your own wording....

suityou01
4th September 2015, 05:58
I can see 6 months of absolute chaos and quite possibly few roles available until everything settles.

Some clients will want d&c, however, given the option of that or additional cost, many will go for the cheaper option. Many clients I have worked for don't want additional employees or the overhead involved in managing them. The easy way to avoid this would be no d&c.

I can also see a situation whereby clients choose d&c, end up paying employers NI and attempt to drop rates to compensate. At the same time contractors will be looking for increased rates to compensate for dividend tax. And quite a few clients will offer more fixed term contracts, the arse-end of the contract market.

I won't be able to take roles down south, and vice versa for others.

If someone doesn't get a grip then this whole shake up has the potential to be one huge ....choose your own wording....

Yep. Just waiting for someone in authority to cotton on. Mexican standoff until they do. But they will.

BolshieBastard
4th September 2015, 06:33
I can see 6 months of absolute chaos and quite possibly few roles available until everything settles.

Some clients will want d&c, however, given the option of that or additional cost, many will go for the cheaper option. Many clients I have worked for don't want additional employees or the overhead involved in managing them. The easy way to avoid this would be no d&c.

I can also see a situation whereby clients choose d&c, end up paying employers NI and attempt to drop rates to compensate. At the same time contractors will be looking for increased rates to compensate for dividend tax. And quite a few clients will offer more fixed term contracts, the arse-end of the contract market.

I won't be able to take roles down south, and vice versa for others.

If someone doesn't get a grip then this whole shake up has the potential to be one huge ....choose your own wording....

Extremely naive imo. Clients want contractors then treat them like employees so they already exercise D&C to some extent. The supervision context is so broad virtually every contractor will be caught. And I dont think clients will look for the cheaper option at all.

They wont pay increased rates as they dont see our 'expenses' as their concern.

All that's going to happen is that current government contracts will start to look more appealing if they are on your doorstep.

psychocandy
4th September 2015, 11:11
Extremely naive imo. Clients want contractors then treat them like employees so they already exercise D&C to some extent. The supervision context is so broad virtually every contractor will be caught. And I dont think clients will look for the cheaper option at all.

They wont pay increased rates as they dont see our 'expenses' as their concern.

All that's going to happen is that current government contracts will start to look more appealing if they are on your doorstep.

Bolshie - spot on. I dont think clients will care a jot.

What will happen is there will be less candidates because less will want to travel because of the costs. And the 7.5% will make the rate less in effect.

Then clients will just moan they cant get people but nothing will happen.

The Spartan
4th September 2015, 11:51
Bolshie - spot on. I dont think clients will care a jot.

What will happen is there will be less candidates because less will want to travel because of the costs. And the 7.5% will make the rate less in effect.

Then clients will just moan they cant get people but nothing will happen.

Aye clients will end up with tulip unless there are any decent contractors in the area.

ShandyDrinker
4th September 2015, 21:13
Bolshie - spot on. I dont think clients will care a jot.

What will happen is there will be less candidates because less will want to travel because of the costs. And the 7.5% will make the rate less in effect.

Then clients will just moan they cant get people but nothing will happen.

What I suspect will then happen is clients shouting skills shortage, government relaxing criteria for people to come to the UK, etc...

GB9
4th September 2015, 21:35
Extremely naive imo. Clients want contractors then treat them like employees so they already exercise D&C to some extent. The supervision context is so broad virtually every contractor will be caught. And I dont think clients will look for the cheaper option at all.

They wont pay increased rates as they dont see our 'expenses' as their concern.

All that's going to happen is that current government contracts will start to look more appealing if they are on your doorstep.

Speaking from 16 years contracting experience I don't think i'm naive at all.

In some cases you will be right and some clients I have worked for assume D&C and indeed they encourage their contractors to act as employees. That extends to tax affairs.

I am also well aware of contractors that stay at the same place for years and move from project to project as requested.

However, some of the big clients I have worked for have absolutely no interest in your personal tax affairs or supervising you. You are expected to come in and do a professional job without any supervision on their part. They state what they want, but how you do it is up to you.

Clients frequently want the cheaper option and have rate cards in place that ensure that is what they get. As an example, I don't know of anyone of any repute who will go to LBC as a project manager due to the rates they offer. What I am aware of is a number of PMO people who have gone to LBC as PMs as the rate is higher than they get as PMO and it gives them a start as a PM.

If end clients end up having to pay the employers NI due to D&C then they will want that off the rate card. If payroll is involved then they will see that as an opportunity to offer more fixed term contracts.

BolshieBastard
6th September 2015, 11:43
Speaking from 16 years contracting experience I don't think i'm naive at all.

In some cases you will be right and some clients I have worked for assume D&C and indeed they encourage their contractors to act as employees. That extends to tax affairs.

I am also well aware of contractors that stay at the same place for years and move from project to project as requested.

However, some of the big clients I have worked for have absolutely no interest in your personal tax affairs or supervising you. You are expected to come in and do a professional job without any supervision on their part. They state what they want, but how you do it is up to you.

Clients frequently want the cheaper option and have rate cards in place that ensure that is what they get. As an example, I don't know of anyone of any repute who will go to LBC as a project manager due to the rates they offer. What I am aware of is a number of PMO people who have gone to LBC as PMs as the rate is higher than they get as PMO and it gives them a start as a PM.

If end clients end up having to pay the employers NI due to D&C then they will want that off the rate card. If payroll is involved then they will see that as an opportunity to offer more fixed term contracts.

Well I can trump only 16 years contracting and I still think you're being naive.

Ive worked for some blue chip FTSE companies in Finance and Utilities and they all wanted contractors but then tried to treat you as a permie. Yeah they expect you to know your stuff and work without supervision but the majority of them dont want you swanning in and leaving anytime you want to. Must be here during core time remember. Current client wants you to have 'leave' 'authorised' which wasnt how it was last time I worked there.

Hell, one Utility company the first question they asked was 'And why do you want to work for xxx utility company, Bolshie?'

Of course there are exceptions but the exceptions are the minority and things are going to get worse.

SussexSeagull
6th September 2015, 12:27
Well I can trump only 16 years contracting and I still think you're being naive.

Ive worked for some blue chip FTSE companies in Finance and Utilities and they all wanted contractors but then tried to treat you as a permie. Yeah they expect you to know your stuff and work without supervision but the majority of them dont want you swanning in and leaving anytime you want to. Must be here during core time remember. Current client wants you to have 'leave' 'authorised' which wasnt how it was last time I worked there.

Hell, one Utility company the first question they asked was 'And why do you want to work for xxx utility company, Bolshie?'

Of course there are exceptions but the exceptions are the minority and things are going to get worse.

This is a big part of the problem. Companies want out of the box contractor skills and experience but for you to act like a FTE when it suits them.

If nothing else it increases the cost of having a contractor.

GB9
6th September 2015, 20:40
Well I can trump only 16 years contracting and I still think you're being naive.

Ive worked for some blue chip FTSE companies in Finance and Utilities and they all wanted contractors but then tried to treat you as a permie. Yeah they expect you to know your stuff and work without supervision but the majority of them dont want you swanning in and leaving anytime you want to. Must be here during core time remember. Current client wants you to have 'leave' 'authorised' which wasnt how it was last time I worked there.

Hell, one Utility company the first question they asked was 'And why do you want to work for xxx utility company, Bolshie?'

Of course there are exceptions but the exceptions are the minority and things are going to get worse.

OK, i'll take the bait :happy

I've worked for 8 FTSE 40 companies including Insurance, Retail bank and Pharma, plus a few FTSE 250. 19 clients in total.

I suppose in reality how you are treated comes down to how much you are wanted by them and also their own culture.

One client I didn't attend site for 4 weeks. They didn't care as the work got done and progress was very visible. Another client most people went home at 2 on a Friday as long as their work was complete. They were fine with that. With most clients I have worked off site as and when it suits me. I inform the client when I am going on leave. I don't ask for authorisation. If they don't like it they can get someone else.

Of course there are some clients that would like you to have been permie. I was at one in the last few years and their attitude ended up in me leaving.

What happens if the rules change I have no idea. If the only contracts available are under SDC then that's what I will have to take. But until it changes.......