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View Full Version : What is everyone going to do assuming HMR&C and Osborne get their way?



DimPrawn
18th November 2015, 11:17
So assuming what we know is announced, contract for 1 month max then PAYE on agency payroll, what you gonna do?

If the above is the case it makes no financial or logical sense to hop every month with bench time and a monthly interview and travel arrangement changes, and being on payroll will make no sense compared with just taking a perm job with lots of benefits and training etc.

So, when contracting is dead, what yer gonna do?

PS. To all the Tory voters that will suffer after the changes, :laugh

LucidDementia
18th November 2015, 11:19
Evolve my business model.

PurpleGorilla
18th November 2015, 11:20
Might look at partnership

Or buying into an existing consultancy.

The above before permiedom

d000hg
18th November 2015, 11:24
being on payroll will make no sense compared with just taking a perm job with lots of benefits and training etcI'm not sure that's definitely the case. Even inside IR35 contracting can be pretty lucrative compared to a permanent salary, so when they put you on PAYE and NI is taken (either from you or the client, depressing your rate to adjust) this is basically where you end up, no?

Some have suggested your PAYE rate will match a normal salary not your initial day rate but you asked in terms of what's been proposed, not further hyperbole :) Short-term contractors are still worth more to a client who wants to get shot of them after 6 months.

lilelvis2000
18th November 2015, 11:25
Retire and open a Kebab shop.

diseasex
18th November 2015, 11:27
Sniff new oportunites and adapt to the market. and more importantly not going back permie.

DimPrawn
18th November 2015, 11:30
I'm not sure that's definitely the case. Even inside IR35 contracting can be pretty lucrative compared to a permanent salary, so when they put you on PAYE and NI is taken (either from you or the client, depressing your rate to adjust) this is basically where you end up, no?

Some have suggested your PAYE rate will match a normal salary not your initial day rate but you asked in terms of what's been proposed, not further hyperbole :) Short-term contractors are still worth more to a client who wants to get shot of them after 6 months.

The agency will have you over a barrel come PAYE time, why on earth would they convert your contractor rate into a salary? Being an employee of the agency will mean sick/maternity, pension and over costs. My gut feel is your take home will halve at this point. Take it or leave it.

Who wants to go through this hassle each time you change client?

d000hg
18th November 2015, 11:30
In answer to the question, I'm not sure. For me, WFH is the main freedom rather than identifying as a contractor so it's possible my current, fairly long-term client might offer me a permie role WFH or I might go looking for a telecommuting perm job, even one abroad.

Alternatively I could lean more towards freelancing although how this will be affected is very unclear. All these sites like rentacoder (:puke:) offer pay-by-the-hour models so how will they be affected for instance?

Another option I wondered about is what if contractors move to piecewise fixed-price work. Instead of 9-5 working with some contract-defined deliverables for 6 months, each week you look at some tasks and agree a price. Or you look at a new feature that should take a couple of weeks, and agree a price based on that. I don't mean bidding on 6 months of work for a fixed price although that is another option, because the risks are so much greater... but piecewise on much smaller units of work.

Or, I pursue the plan B more actively.

d000hg
18th November 2015, 11:33
The agency will have you over a barrel come PAYE time, why on earth would they convert your contractor rate into a salary? Being an employee of the agency will mean sick/maternity, pension and over costs. My gut feel is your take home will halve at this point. Take it or leave it.Are we talking about being an employee of the agency (or client)? I thought we were simply talking about having to be paid through their payroll, but retaining our lack of rights so we can still be in a X-month contract.

On that basis, your £400/day would stay the same but you'd lose much more of it?

It sounds like your reading of the proposals is you have to become an employee after a month, which I don't think is the proposed setup.

DimPrawn
18th November 2015, 11:33
For me it's making me focus on making plan b a success. If it works out and I become wealthy I'm taking it and me to a sunny tax haven and leaving Britain to fester in debt, terrorists and immigrant shanty towns.

DimPrawn
18th November 2015, 11:35
Evolve my business model.

You mean claim JSA and watch porn.

alphadog
18th November 2015, 11:35
My guess is the 1 month thing will be watered down a bit. There are rumours that the end client will be able to confirm arrangements after 1-3 months to allow status quo.

But if they bring in a rock solid 1 month limit and eliminate entrepreneurs relief, then it's DOOM DOOM DOOM! :eek:

Pondlife
18th November 2015, 11:36
The agency will have you over a barrel come PAYE time, why on earth would they convert your contractor rate into a salary? Being an employee of the agency will mean sick/maternity, pension and over costs. My gut feel is your take home will halve at this point. Take it or leave it.

Who wants to go through this hassle each time you change client?

Why do you think this? The demand isn't going anywhere. Why would they not simply engage you via their newly formed brolly company. Everything is PAYE so no comeback on them or the client.

diseasex
18th November 2015, 11:36
You mean claim JSA and watch porn.

You mean do porn?

LucidDementia
18th November 2015, 11:36
You mean claim JSA and watch porn.

I might mean that.

Or I might mean that the reality of any problem in business is an opportunity for something.

DimPrawn
18th November 2015, 11:37
My guess is the 1 month thing will be watered down a bit. There are rumours that the end client will be able to confirm arrangements after 1-3 months to allow status quo.

But if they bring in a rock solid 1 month limit and eliminate entrepreneurs relief, then it's DOOM DOOM DOOM! :eek:

From the govt point of view, it's a success. You lose your house, it's repossesed to the bank, who sell it to a wealthy Tory landlord, who rents it to some Syrian "refugees" at the tax payers expense. Win-win.

DaveB
18th November 2015, 11:38
I'll be looking closely at how they they intend to cover those working with multiple clients. There has already been a statement made that those having multiple clients would not be caught by the changes but no indication how they would apply this. How many clients counts as multiple, over what time period, what happens if I go from 3 clients to one, to two then back to three in the course of a year?

If three contractors get together and invoice eachother for a days work every month, would that count as multiple clients?

Still lots of questions to be answered.

LucidDementia
18th November 2015, 11:39
My guess is the 1 month thing will be watered down a bit. There are rumours that the end client will be able to confirm arrangements after 1-3 months to allow status quo.

But if they bring in a rock solid 1 month limit and eliminate entrepreneurs relief, then it's DOOM DOOM DOOM! :eek:

The conjecture round here based on articles in unreadable newspapers astonishes me.

Things will never be as bad as suggested; the £400 million being bleated about is nonsense. Yes, they may gain it in PAYE thefts but how much will they lose from agencies/consultancies who go out of business, the impact that could potentially have on the benefits system etc etc

I suggest everyone calms down a bit and wait and see.

d000hg
18th November 2015, 11:40
From the govt point of view, it's a success. You lose your house, it's repossesed to the bank, who sell it to a wealthy Tory landlord, who rents it to some Syrian "refugees" at the tax payers expense. Win-win.

The tories don't like BTL landlords or Syrian refugees though.

Can we stay vaguely on some sort of sensible discussion though, it's quite interesting.

meridian
18th November 2015, 11:43
For many of my clients, going on the payroll means having to have a grade. The existing grades have specified upper and lower pay limits, so to convert from contractor rates to payroll would mean the clients would need to either set up a specific "contractor" grade, or would lower all contractor rates to fit inside the grades.

I'll be looking at the legislation closely to see where the possible loopholes are, and going with those. Either setting up / joining a consultancy, setting up offshore, forming an LLP, or similar.

Having to pay PAYE is not the issue for me (I'm well into the higher rate bracket anyway and pay the full whack of tax personally), but lowering my rate to an employee's rate would be commercial suicide.

alphadog
18th November 2015, 11:47
The conjecture round here based on articles in unreadable newspapers astonishes me.

Things will never be as bad as suggested; the £400 million being bleated about is nonsense. Yes, they may gain it in PAYE thefts but how much will they lose from agencies/consultancies who go out of business, the impact that could potentially have on the benefits system etc etc

I suggest everyone calms down a bit and wait and see.

Seems like conjecture is all we have got. No point attending any govt committee meetings to put in your two cents worth or signing up for petitions etc, because they just do whatever they want to do anyway.

So, it's going to be a case of conjecture, followed by instant change by govt edict. Possibly even backdated, depending on how they are feeling.

VectraMan
18th November 2015, 11:49
Nobody will be on the client's payroll. That's a nonsense. But it'll probably mean having to give in on IR35, or maybe even being forced to use an approved umbrella rather than our own Limiteds. Either way it's still worth contracting just as it is to all the thousands that already use umbrellas.

BolshieBastard
18th November 2015, 11:51
Why do you think this? The demand isn't going anywhere. Why would they not simply engage you via their newly formed brolly company. Everything is PAYE so no comeback on them or the client.

Its because many agencies already operate their own 'permie type' contractor model and their pay is a pittance compared to today's day rate.

Neither are they going to operate a two tier system where their existing 'permie type' contractor gets a lower rate of pay while the 1 month and switch contractor enjoys a far higher rate \ salary \ call it what you will.

GJABS
18th November 2015, 11:53
Would we not just be on zero-hours contracts, with no holiday pay or other benefits.
Would not the only effect be that our gross pay would go down by the amount of employer NI, more employee NI, and more limited ability to claim expenses.

Pondlife
18th November 2015, 11:57
Its because many agencies already operate their own 'permie type' contractor model and their pay is a pittance compared to today's day rate.

Neither are they going to operate a two tier system where their existing 'permie type' contractor gets a lower rate of pay while the 1 month and switch contractor enjoys a far higher rate \ salary \ call it what you will.

Yes but that 1st tier is for the supply of receptionists and office temps. The demand from Big Co for PMs/BAs/Devs etc isn't going away so why do people assume the cost of hiring this skill will massively decrease based on the method of end taxation. It won't IMHO.

Lightwave
18th November 2015, 12:05
I'm going to take some time off next year anyway.
Hoping to keep my current client part time WFH, see what else is out there.
If that's not an option, I will be on the beach for the spring and summer.

Adapt and survive.
But I've always been aware that the good money of contracting might not always be there, so I've never over-committed myself financially.
I'm a hardware design engineer, there are plenty of permy hardware designers just as good as me earning mediocre salaries, I can go back to that and be comfortable as I will have a trivial mortgage and some savings. Apart from council tax, all my outgoings are probably below average.

Some contractors earn great money for 3 years and think they're entitled to it for life, scary mortgages, flash cars on HP and all that.
I've seen a few take financial kickings before, not pretty!

Maybe look to work abroad again after a while.
Maybe get serious about the plan B business, been looking into buying something every time I'm between contracts, contracting has always been lower risk until now.
But contracting in engineering is not what it was, I find it harder every year to find the enthusiasm for badly run tin-pot development jobs.

Lightwave
18th November 2015, 12:09
Yes but that 1st tier is for the supply of receptionists and office temps. The demand from Big Co for PMs/BAs/Devs etc isn't going away so why do people assume the cost of hiring this skill will massively decrease based on the method of end taxation. It won't IMHO.

I think this is partly about HMG trying to massively reduce the public sector spend on interims, con-sultants and so forth.
Chucking a grenade into that market makes a lot of sense in terms of the deficit.

MarkT
18th November 2015, 12:09
The tories don't like BTL landlords or Syrian refugees though.

Can we stay vaguely on some sort of sensible discussion though, it's quite interesting.

Exactly - what Syrian refugees have to do with PSCs I have no idea. Perhaps the slavers sending them over are disguising their employment or using an MSC?

MarkT
18th November 2015, 12:15
Would we not just be on zero-hours contracts, with no holiday pay or other benefits.
Would not the only effect be that our gross pay would go down by the amount of employer NI, more employee NI, and more limited ability to claim expenses.

From what I have read we'd be caught by IR35. So it'd be easier to just go through an umbrella, we'd probably still get T&S as we'd no longer be PSCs. That's probably it. It'd cost me £2,500 a month, but I'd survive, just about.

I can actually see rates go up as less people may want to contract (some will retire, choose a plan B, go perm for the security etc) A top tier developer who is happy to do a 6 month gig is going to command a higher fee, because there will be less of them about.

Capita and the like will be rubbing their hands with glee and that is really what this is about for me.

Edwarding master/slave employer/employee stuff. Too many plebs aren't beholden to Eton educated types. It must stop!

Martin Scroatman
18th November 2015, 12:20
From what I have read we'd be caught by IR35. So it'd be easier to just go through an umbrella, we'd probably still get T&S as we'd no longer be PSCs. That's probably it. It'd cost me £2,500 a month, but I'd survive, just about.

I can actually see rates go up as less people may want to contract (some will retire, choose a plan B, go perm for the security etc) A top tier developer who is happy to do a 6 month gig is going to command a higher fee, because there will be less of them about.

Capita and the like will be rubbing their hands with glee and that is really what this is about for me.

Edwarding master/slave employer/employee stuff. Too many plebs aren't beholden to Eton educated types. It must stop!

:spel: FEWER

..and what's Edward got to do with it?

DaveB
18th November 2015, 12:24
:spel: FEWER

..and what's Edward got to do with it?

Don't interrupt when the grownups are talking.

d000hg
18th November 2015, 12:30
From what I have read we'd be caught by IR35. So it'd be easier to just go through an umbrella, we'd probably still get T&S as we'd no longer be PSCs. That's probably it. It'd cost me £2,500 a month, but I'd survive, just about. You'd be paying £2500 more in tax each month and you'd only just about survive?

DaveB
18th November 2015, 12:45
Just had an interesting chat with manager at Client A.

I'm signed on here until March, they want me beyond that but wont be able to "source my services" in the same way as now (Agency via a PSL). Floated the idea of going direct with them, no opposition and an agreement that it was worth considering.

BolshieBastard
18th November 2015, 13:05
Yes but that 1st tier is for the supply of receptionists and office temps. The demand from Big Co for PMs/BAs/Devs etc isn't going away so why do people assume the cost of hiring this skill will massively decrease based on the method of end taxation. It won't IMHO.

No its not (receptionists and temps). Its about IT Contractors who were sold the model for never being out of work but still 'in a contract.' Seriously, where have you been living these last 5 years!?

NibblyPig
18th November 2015, 13:08
If it really was 1 month I would probably take a bit of time off to see what happens, i.e. if anyone comes up with a way to bypass the legislation somehow, and if not, just take a permie job for a year until the whole thing comes crashing down, then switch back to contract again when they undo it all.

If they don't undo it all I will move to Canada.

LucidDementia
18th November 2015, 13:16
One of many thoughts which have occurred to me: agencies becoming willing (or new ones popping up) to trade with Sole Traders instead of Ltd PSCs.

Stop panicking. If you are a genuine businessman this will just be a speed-bump IMHO, if you're a permie in disguise, well, suck it up you lame ass.

pjt
18th November 2015, 13:37
I'll wait for the dust to settle and see how it affects the market.

If we end up on payroll its game over. For me I'll be looking to do something totally different or move/work abroad.
If we end up IR35 caught I'll try to carry on but if T&S is also no longer available I'll work local or as above look to do something else.
If we end up with only the Divi tax either due to operating differently or we're all over reacting then :yay: carry on as normal and keep invoicing :banana:

Either way I don't see myself going back permie. Been there and it wasn't nice.

MarkT
18th November 2015, 13:44
You'd be paying £2500 more in tax each month and you'd only just about survive?

2 disabled kids, debts from my younger days and bad decisions in a past life continue to haunt me I'm afraid.

I'd make sure that house isn't made of glass by the way...

MarkT
18th November 2015, 13:47
:spel: FEWER

..and what's Edward got to do with it?

PFFT

Typo - I meant "during the era of Serfdom" :laugh

GB9
18th November 2015, 13:56
Spoken to someone in client HR this morning. They are aware of potential changes. However, they were adamant that none of the Contract resource is going on the payroll.

MicrosoftBob
18th November 2015, 13:57
Turn to photography, teaching, increasing my consultancy services to small/medium and businesses in IT and marketing and help promote my girlfriends alternative fashion business

In other words anything but contracting and permiedom

MicrosoftBob
18th November 2015, 14:03
Are we talking about being an employee of the agency (or client)? I thought we were simply talking about having to be paid through their payroll, but retaining our lack of rights so we can still be in a X-month contract.

On that basis, your £400/day would stay the same but you'd lose much more of it?

It sounds like your reading of the proposals is you have to become an employee after a month, which I don't think is the proposed setup.

My fear is that it will mean being paid and taxed as an employee with no employee benefits and your deemed employer able to dimiss you at short notice

I.e. zero hour contracts on permie pay with less rights than a zero hours worker

DimPrawn
18th November 2015, 14:06
And the winner is......

http://2.bp.blogspot.com/_4FDiLOkr8P8/S3kjFdiF80I/AAAAAAAAABI/y4oY-7SDm7U/s1600/BobTombstone.jpg

psychocandy
18th November 2015, 14:06
You mean claim JSA and watch porn.

Hey thats my idea!

DimPrawn
18th November 2015, 14:09
I think whatever we choose to do, we must minimise the tax take to that vile reptile Osborne. Leave the country, retire, work in a chipshop, whatever massively reduces the tax in his grubby hands.

If the tax take goes up, they will tighten the noose even more, spurned on by its success....

LucidDementia
18th November 2015, 14:10
I think whatever we choose to do, we must minimise the tax take to that vile reptile Osborne. Leave the country, retire, work in a chipshop, whatever massively reduces the tax in his grubby hands.

If the tax take goes up, they will tighten the noose even more, spurned on by its success....


Again, don't panic. Nothing the man has ever done has worked yet.

MarkT
18th November 2015, 14:13
My fear is that it will mean being paid and taxed as an employee with no employee benefits and your deemed employer able to dimiss you at short notice

I.e. zero hour contracts on permie pay with less rights than a zero hours worker

Honestly - we won't go on payroll, it's not required. We'd go via an Umbrella of sorts and get caught by IR35.

Anyway - much as I've lost sleep about it, in reality we don't know a thing about what's going to be said. It could be nothing at all, it could be 1 month and you are done. It's going to be a bloody long week, but we just have to wait.

One thing we should remember is that HMRC are VERY bad at this stuff, they haven't ever put together workable legislation on this. Whatever they do, it will be challenged, and some way will be found to get around it in some capacity.
Also remember, everything up until the Guardian and Mail reports pointed to a bigger clawback in terms of div tax and T&S. Why put that legislation through if you are just going to pull the plug?
Whatever happens, I can't see such a huge change be made by April, more likely further consultation until Feb or March, with the big announcement in April 16 for April 17.

I think it's very likely we lose T&S next week, but that becomes moot if we aren't PSCs in April 17 anyway.

jmo21
18th November 2015, 14:25
My guess is we'll be forced on to an intermediary payroll (either agency or unmbrella).

Rates won't go down (maybe they will a little, but not to permie levels), but obviously our take home will be affected.

The bits I wonder about, like others, is how are the small companies affected going to be identified? Turnover? Number of employees?

Pondlife
18th November 2015, 14:27
My guess is we'll be forced on to an intermediary payroll (either agency or unmbrella).

Rates won't go down (maybe they will a little, but not to permie levels), but obviously our take home will.

The bits I wonder about, like others, is how are the small companies affected going to be identified? Turnover? Number of employees?

The intermediary (agency) has to report who isn't getting paid via PAYE. This is already happening.

d000hg
18th November 2015, 14:28
2 disabled kids, debts from my younger days and bad decisions in a past life continue to haunt me I'm afraid.

I'd make sure that house isn't made of glass by the way...

I don't bring in anything like £100k to begin with, in order that I could require it! I could just get a bog standard 30k coding job if worst came to worst, and I deliberately don't allow myself to forget that my contracting income is a massive luxury.

jmo21
18th November 2015, 14:39
The intermediary (agency) has to report who isn't getting paid via PAYE. This is already happening.

and if direct, are end clients already doing this?

jamesbrown
18th November 2015, 14:48
and if direct, are end clients already doing this?

No, hence "intermediary reporting requirement". If a PSC is working direct, there is no reporting requirement, although the PSC may have a reporting requirement on a subcontractor (i.e. where the PSC is an intermediary).

Lightwave
18th November 2015, 14:49
I don't bring in anything like £100k to begin with, in order that I could require it! I could just get a bog standard 30k coding job if worst came to worst, and I deliberately don't allow myself to forget that my contracting income is a massive luxury.

Similar here perhaps.
I used to make £100k in the good old days, now the margin over what I'd get permie is much reduced, but the sting in the tail is that few employers want a permie in their 50s who's been on the tools designing stuff and avoided all leadership/management nonsense as a freelancer for 20 years.

DimPrawn
18th November 2015, 14:57
Similar here perhaps.
I used to make £100k in the good old days, now the margin over what I'd get permie is much reduced, but the sting in the tail is that few employers want a permie in their 50s who's been on the tools designing stuff and avoided all leadership/management nonsense as a freelancer for 20 years.

There's no long term money in IT, you have 20 years to coin it in as a techie, 20 to 40 years old. In your 40's you need either to be well into plan b, or taken the permie management pill, where £100K p.a. is a common as muck. I know managers on twice that with bonuses.

DaveB
18th November 2015, 15:00
There's no long term money in IT, you have 20 years to coin it in as a techie, 20 to 40 years old. In your 40's you need either to be well into plan b, or taken the permie management pill, where £100K p.a. is a common as muck. I know managers on twice that with bonuses.

Nope.

Wrong side of 45 now and turnover is double that. The "M" word appears nowhere on my CV.

It depends what you do and how you do it. Move with the times and stay up to date, and there is plenty of money to be made.

Pondlife
18th November 2015, 15:13
and if direct, are end clients already doing this?


No, hence "intermediary reporting requirement". If a PSC is working direct, there is no reporting requirement, although the PSC may have a reporting requirement on a subcontractor (i.e. where the PSC is an intermediary).

WJBS

More on it at http://forums.contractoruk.com/accounting-legal/107985-agencies-demanding-extra-information-new-reporting-requirements.html

Lightwave
18th November 2015, 15:14
Nope.

Wrong side of 45 now and turnover is double that. The "M" word appears nowhere on my CV.

It depends what you do and how you do it. Move with the times and stay up to date, and there is plenty of money to be made.

And where?
Once I had enough cash to enjoy life I became less willing to chase around the country (etc) for a bit more.

AtW
18th November 2015, 15:17
Evolve my business model.

Ben Dover Productions company name is already taken...

AtW
18th November 2015, 15:24
But if they bring in a rock solid 1 month limit and eliminate entrepreneurs relief, then it's DOOM DOOM DOOM! :eek:

Why would they keep ER? It would allow people pay 18% corp tax (when it arrives) and then 10% CGT on remaining amount by claming ER - effective taxation of 26% instead of PAYE which can reach 60% (45% income tax + 2% employee NIC + 13.8% employer NIC).

LucidDementia
18th November 2015, 15:34
Why would they keep ER? It would allow people pay 18% corp tax (when it arrives) and then 10% CGT on remaining amount by claming ER - effective taxation of 26% instead of PAYE which can reach 60% (45% income tax + 2% employee NIC + 13.8% employer NIC).


The fact all we now have is an entrepreneurial economy would suggest keeping it is a good idea, but it seems Osborne's only wish is to bankrupt the UK as fast as possible so my statement is invalid.

DimPrawn
18th November 2015, 15:38
The fact all we now have is an entrepreneurial economy would suggest keeping it is a good idea, but it seems Osborne's only wish is to bankrupt the UK as fast as possible so my statement is invalid.

I think he's looking forward to leaving a note to the next Labour chancellor "This is how you REALLY AND PROPERLY screw up an economy and a country, you amateurs." :devil

LucidDementia
18th November 2015, 15:43
What pains me most is folk running around calling him a genius.

The amount of pain and grief caused in his utterly futile attempt to remove the deficit is astonishing.

alphadog
18th November 2015, 15:47
...turnover is double that...

Move with the times and stay up to date, and there is plenty of money to be made.

Good work! I take it you rake in around 100ph? You want to give us a hint about where we can get that sort of cash too :smokin

Pondlife
18th November 2015, 15:52
Good work! I take it you rake in around 100ph? You want to give us a hint about where we can get that sort of cash too :smokin

If you take off VAT and Client Co is paying expenses then it's probably 500-600 a day.

MarkT
18th November 2015, 15:53
What pains me most is folk running around calling him a genius.

The amount of pain and grief caused in his utterly futile attempt to remove the deficit is astonishing.

Yep - well that and why he's so obsessed with his debt target. Why it can't be a year or two later I've no idea.

So we owe more for a few years longer, why does that matter? :confused:

GB9
18th November 2015, 15:55
Good work! I take it you rake in around 100ph? You want to give us a hint about where we can get that sort of cash too :smokin

If you are doing back fill BAU codibgwork then you probably won't. If you have something the client hasn't got and you are skilled at it then there are plenty of £600+ gigs available.

DaveB
18th November 2015, 15:55
Good work! I take it you rake in around 100ph? You want to give us a hint about where we can get that sort of cash too :smokin


If you take off VAT and Client Co is paying expenses then it's probably 500-600 a day.

Multiple clients and a good day rate.

LucidDementia
18th November 2015, 15:55
If you take off VAT and Client Co is paying expenses then it's probably 500-600 a day.

So you include VAT in your turnover figure? Nice.

DaveB
18th November 2015, 15:56
So you include VAT in your turnover figure? Nice.

Only the residual after accounting for FRS.

MarkT
18th November 2015, 15:56
If you take off VAT and Client Co is paying expenses then it's probably 500-600 a day.

I used to do the budget for a regulatory project for a LLoyd's of London insurer in the city. We were a team of 6, our boss earned £2,700 a day, plus expenses. :sick

LucidDementia
18th November 2015, 15:59
Only the residual after accounting for FRS.

I wasn't aiming at you, I was digging at Pondlife :D

LucidDementia
18th November 2015, 16:01
Yep - well that and why he's so obsessed with his debt target. Why it can't be a year or two later I've no idea.

So we owe more for a few years longer, why does that matter? :confused:

We're going to owe a lot, forever. This is what''s so misleading. It's a massive pile of horseshit and he's making people poor for no earthly good reason other than to line central bank pockets with more power and property.

We're still borrowing £100 Billion a year.

alphadog
18th November 2015, 16:04
Multiple clients and a good day rate.

Real time moonlighting eh :wink

Pondlife
18th November 2015, 16:04
So you include VAT in your turnover figure? Nice.


I wasn't aiming at you, I was digging at Pondlife :D

For the purposes of arguing on the internet I do. Of course. :D

alphadog
18th November 2015, 16:05
I used to do the budget for a regulatory project for a LLoyd's of London insurer in the city. We were a team of 6, our boss earned £2,700 a day, plus expenses. :sick

If anyone wants a dogs body to join their team at Lloyd's, I am your man :D

DaveB
18th November 2015, 16:08
Real time moonlighting eh :wink

No. Balancing the demands of a diverse client base to make the best use of available resources. :smokin

Andy2
18th November 2015, 16:12
I think they are following the same model as in switzerland
Over there agencies take you on their payroll and you get paid after deduction of taxes and NI
Which means permie jobs are more lucrative there than contracting.
bye bye contracting in UK

OwlHoot
18th November 2015, 16:16
Sorry if this has been mentioned, but I don't think this primarily about tax gains. So people scoffing at the derisory £400M tax gain are missing the point.

I think it is about the Tories caving in to their civil servants' long-time urging to herd self-employed and contractors into larger trusted "units" (for want of a better word) which can be supervised by fewer HMR&C officials.

Over 1000 HMR&C inspectors have been laid off in the last year, if I'm not mistaken. So the Government is very keen to make HMR&C more efficient by in effect devolving tax oversight to larger companies, who they may feel can be trusted more and more efficiently audited etc than a large throng of hated, tiresome, and largely untrustworthy loose cannons which is how they regard the self-employed and contractors!

If so it won't work as intended, what with contractors dipping in and out of contracts every month, working for each other in all kinds of absurdly contrived ways, and so on. If anything, it will make tax audits and inspections even more fraught and complicated :laugh

AtW
18th November 2015, 16:19
If they don't undo it all I will move to Canada.

Yep.

Canada is supposed to be heavy taxing country ... whole 29% of taxable income over $138,586!!! :laugh

... and they've got great tax funded services.

To be fair they've got also local tax - depends on territory where you live, so there is some choice - 10% in Alberta, overall looks like no worse than 40% here.

Only downside - far away and lots of snow. But if your lifestyle is destroyed by a "pro-business" Tory Scumverment then might as well move.

ChimpMaster
18th November 2015, 16:20
Go direct to the client? Would that count as being 'in business' as opposed to a 'pseudo employee' as HMRC would see it?

DaveB
18th November 2015, 16:29
Go direct to the client? Would that count as being 'in business' as opposed to a 'pseudo employee' as HMRC would see it?

It's a step in the right direction, but I still think we are going to need to show multiple concurrent clients in order to dodge it altogether. What that looks like in practice depends on how they define things in the actual legislation.

3 contractors invoiceing eachother for a day a month A->B->C->A would give everyone multiple clients, at least on paper.

DimPrawn
18th November 2015, 16:31
Yep.

Canada is supposed to be heavy taxing country ... whole 29% of taxable income over $138,586!!! :laugh

... and they've got great tax funded services.

To be fair they've got also local tax - depends on territory where you live, so there is some choice - 10% in Alberta, overall looks like no worse than 40% here.

Only downside - far away and lots of snow. But if your lifestyle is destroyed by a "pro-business" Tory Scumverment then might as well move.

Max/Min temps---precipitation---sunshine hours

London
Jan: 8C/2C---55mm---61
Feb: 8C/2C---41mm---78
Mar: 11C/4C---42mm---114
Apr: 14C/6C---44mm---168
May: 18C/9C---49mm---197
Jun: 21C/12C---45mm---206
Jul: 24C/14C---45mm---211
Aug: 23C/14C---50mm---203
Sep: 20C/11C---49mm---148
Oct: 16C/8C---69mm---116
Nov: 11C/5C---59mm---72
Dec: 8C/3C---55mm---52

Vancouver
Jan: 6C/1C---154mm---60
Feb: 8C/2C---123mm---85
Mar: 10C/3C---114mm---134
Apr: 13C/5C---84mm---182
May: 17C/8C---68mm---231
Jun: 19C/11C---55mm---229
Jul: 22C/13C---40mm---295
Aug: 22C/13C---39mm---268
Sep: 19C/11C---54mm---199
Oct: 14C/7C---113mm---125
Nov: 9C/3C---181mm---64
Dec: 6C/1C---176mm---56

London is warmer and much drier, but Vancouver gets an extra 300 hours of sun annually.

d000hg
18th November 2015, 16:34
Maybe I'll set up a plan B offering advice to contractors how to proceed.

MarkT
18th November 2015, 16:39
It's a step in the right direction, but I still think we are going to need to show multiple concurrent clients in order to dodge it altogether. What that looks like in practice depends on how they define things in the actual legislation.

3 contractors invoiceing eachother for a day a month A->B->C->A would give everyone multiple clients, at least on paper.

But what if I invoiced my father in law, a solicitor, for £50 a day consultancy, 1 day a month, then paid it back to him for legal services.....forever...

I like to sail close to the wind....

DaveB
18th November 2015, 16:45
But what if I invoiced my father in law, a solicitor, for £50 a day consultancy, 1 day a month, then paid it back to him for legal services.....forever...

I like to sail close to the wind....

This is the kind of stuff that needs to be looked at in detail when we know what the actual outcome is. As I've said before, there will be loopholes. HMRC / HMG are simply not that good at drafting this stuff and there will be far more, and likely far better, people interested in pulling it apart than they can put on creating it to begin with.

MarkT
18th November 2015, 16:45
If anyone wants a dogs body to join their team at Lloyd's, I am your man :D

Sad to say I got the boot in 2012, cost savings.....:igmc:

MarkT
18th November 2015, 16:49
This is the kind of stuff that needs to be looked at in detail when we know what the actual outcome is. As I've said before, there will be loopholes. HMRC / HMG are simply not that good at drafting this stuff and there will be far more, and likely far better, people interested in pulling it apart than they can put on creating it to begin with.

Agree completely with that - it could be a storm in a teacup and we don't actually get bitten at all. I think there will be ways around it, because HMRC are utterly incompetent. I know that because I've worked for them before, via SERCO.

In 2009 my boss there didn't know the different between a FTC and a contractor and asked me to become one, for 5 years. I politely declined indicating why.

jamesbrown
18th November 2015, 17:58
It's a step in the right direction, but I still think we are going to need to show multiple concurrent clients in order to dodge it altogether. What that looks like in practice depends on how they define things in the actual legislation.

3 contractors invoiceing eachother for a day a month A->B->C->A would give everyone multiple clients, at least on paper.

If they implement this, it's going to be some sort of turnover requirement (e.g. >30% generated from another source on an annual basis), otherwise it wouldn't be worth the Parliamentary parchment it was written on. However, back in the real world, how is this going to work? I currently have two clients, about 85/15, with another coming online at the end of the year (probably 80/15/5). This varies a lot on any given timeframe. Each of those clients are contracted for different periods, one of them for several years. The mix could be different 6 months from now. Also, one or more contracts could be cancelled without notice. You might go into a financial year expecting to pass such a test and come out having failed. There would be no ability to plan.

If they are going to develop stupid, arbitrary, tests, they at least need to be easily applied. For example, working from your own premises/WFH would be a straightforward exclusion (aligned with lack of SDC on some level). A test of concurrent clients wouldn't be workable unless it was a straightforward yes/no at the end of the year (i.e. did you have concurrent clients at any point during the year?). In that case, it wouldn't be so much a loophole as a gaping chasm.

centurian
18th November 2015, 19:23
Yep.

Canada is supposed to be heavy taxing country ... whole 29% of taxable income over $138,586!!! :laugh

... and they've got great tax funded services.

To be fair they've got also local tax - depends on territory where you live, so there is some choice - 10% in Alberta, overall looks like no worse than 40% here.

Same argument applies to the US. The "top rate of tax" may be 39.6%, but once you add on state and local taxes, it's a lot more than the 47% marginal Tax+NI rate here, especially in the more affluent states/cities.

And they have a lot more bands. In some places, the top rate kicks in when earning millions.

_V_
18th November 2015, 19:58
Same argument applies to the US. The "top rate of tax" may be 39.6%, but once you add on state and local taxes, it's a lot more than the 47% marginal Tax+NI rate here, especially in the more affluent states/cities.

And they have a lot more bands. In some places, the top rate kicks in when earning millions.

But then we have VAT at 20% (more than US sales tax), Council Tax, VAT and Duty on fuel meaning ours costs more than twice the USA.

Zero Liability
18th November 2015, 20:16
But then we have VAT at 20% (more than US sales tax), Council Tax, VAT and Duty on fuel meaning ours costs more than twice the USA.

And the weather's shyte.

MPwannadecentincome
18th November 2015, 21:06
For many of my clients, going on the payroll means having to have a grade. The existing grades have specified upper and lower pay limits, so to convert from contractor rates to payroll would mean the clients would need to either set up a specific "contractor" grade, or would lower all contractor rates to fit inside the grades.


Don't banks get around this by giving techies Director and Vice President titles to give them a good pay grade?
But for employers it is more than just the grades, having permies on the books is a liability, no companies want to increase head count for anything other than core roles within the organisation, that is why they used contractors in the first place. Yes FTC is an option and a nice headache for HR in maintaining head counts and grades and pension liabilities.

MPwannadecentincome
18th November 2015, 21:09
I think this is partly about HMG trying to massively reduce the public sector spend on interims, con-sultants and so forth.
Chucking a grenade into that market makes a lot of sense in terms of the deficit.

If contractors go out of the market into permie land that reduces supply which puts up the rates. Also, reduced supply means they have to utilise the consultancies whose rates are already higher. So where is the saving?

TheLordDave
18th November 2015, 21:30
Lose my house, then emigrate.

BolshieBastard
18th November 2015, 21:56
Well, I only returned due to having to top up the bank of mum & dad and pension pot so, hopefully I can go back to retirement in 3 more years.

In the meantime, if the shit hits the fan I'll concentrate on finding contracts closer to home, work via whatever mechanism osbourne brings in (gulp) and as a last resort, go permie.

However, I think the chances of permiedom will be remote since employers will not want to take me on due to ageism. :tumble::laugh

AtW
19th November 2015, 00:24
The fact all we now have is an entrepreneurial economy would suggest keeping it is a good idea, but it seems Osborne's only wish is to bankrupt the UK as fast as possible so my statement is invalid.

Yeah, they will keep it ... in such a way that most people won't be able to claim it. Or they might just choose to reform this "archaic" entrepreneurial economy malarkey and move to fully flexible work force that will bend over on request of offshore based friends of the Tory Party.

AtW
19th November 2015, 00:40
Same argument applies to the US. The "top rate of tax" may be 39.6%, but once you add on state and local taxes, it's a lot more than the 47% marginal Tax+NI rate here, especially in the more affluent states/cities. And they have a lot more bands. In some places, the top rate kicks in when earning millions.

Canada has got good health system for all taxpayers. For USA one needs to be young in which case medical insurance won't be expensive.

Let's take Germany, here is what they've got: 45% income tax, but - "The last change of rates occurs at a taxable income of €250,730 (€501,460 for married couples) when the marginal tax rate jumps from 42% to 45%. The course of the marginal tax rate and the resulting average tax rate are depicted in the graph to the right."

So they correctly add up nicely income for whole family, where as in this country the pro-business Govt is shafting honest hard working taxpayers whose wife stays at home to look after kids.

Capital Gains Tax in Germany is 25% (28% here).

Tax on Dividends - 25%

VAT - 19%

So what we've got is pretty fooked up situation where this country taxes far heavier than Germany :tantrum:

Danglekt
19th November 2015, 10:20
For me I chose contracting so I could keep doing the level of work I enjoy without becoming a VSM in a corporate monster and leaving any job satisfaction at the perpetual meeting room door.

Income wise I earn as a contractor a similar amount gross to what I would if I'd have stayed and climbed the corporate tree. The difference is that due to the fact I've managed to have back to back contracts for a few years and cos of the tax arrangements of being Limited I have more take home - and I get to do work I enjoy without becoming too full of hot air.

If I was forced into the same tax position as a perm then I'd seriously consider trying to jump back into climbing the ladder again as a perm, at least that way I get a fancy company car, "security" and all the other exec perks for the same income, only downside is the depression that will swallow my soul every time I get up for work.

But my current view is that this will not be as extreme as people are worried it will be, and some middle ground will emerge which I aim to tread - doing what I enjoy as a contractor on a slightly better income position than perm is what I'm aiming for. A big part of my decision will be if we can tax plan across the years to allow for bench time - PAYE seems a very unsuitable vehicle for us IMO.

rl4engc
19th November 2015, 11:20
Personally I think the freelancing/contracting market is too big for Osborne to try to wipe it out in one fell swoop, can you imagine if loads of finance Contractors in London went off to sunnier shores or just changed careers? The city would grind to a standstill.

One thought did cross my mind though, could it not drive ClientCo's/Agencies toward a more flexible model for their contractors, so instead of offering "6 months at £xxx per day". They'd offer "120 days over x months for £yyyyy" ?

At a stroke this would mean contractors are free to have more than one client (So Osborne can F*** right off with his PAYE bollocks..), and this could be agreed at interview "I can work four out of five days for you, I'm currently working 1 day per week at ClientB nominally Fridays but they're fairly flexible".

As Contractors we are flexible (get rid of when they want) this just means they might have to be a bit more flexible too, if not they don't get the workers. Obviously it won't work for all contracts but a lot just need a block of work doing in a certain time frame.

PurpleGorilla
19th November 2015, 11:32
Personally I think the freelancing/contracting market is too big for Osborne to try to wipe it out in one fell swoop, can you imagine if loads of finance Contractors in London went off to sunnier shores or just changed careers? The city would grind to a standstill.

One thought did cross my mind though, could it not drive ClientCo's/Agencies toward a more flexible model for their contractors, so instead of offering "6 months at £xxx per day". They'd offer "120 days over x months for £yyyyy" ?

At a stroke this would mean contractors are free to have more than one client (So Osborne can F*** right off with his PAYE bollocks..), and this could be agreed at interview "I can work four out of five days for you, I'm currently working 1 day per week at ClientB nominally Fridays but they're fairly flexible".

As Contractors we are flexible (get rid of when they want) this just means they might have to be a bit more flexible too, if not they don't get the workers. Obviously it won't work for all contracts but a lot just need a block of work doing in a certain time frame.

Purchase Order 60 units - expert engineering consultancy

unit = 1 day

cost £500 / unit

Simples

DaveB
19th November 2015, 11:35
Purchase Order 60 units - expert engineering consultancy

unit = 1 day

cost £500 / unit

Simples

Which is eactly how it should work. Substitute <area of expertise> for "Expert Engineering" and it can be aplied to almost anything. It's how I deal with my direct clients as well.

jamesbrown
19th November 2015, 11:50
Which is eactly how it should work. Substitute <area of expertise> for "Expert Engineering" and it can be aplied to almost anything. It's how I deal with my direct clients as well.

People will be looking for loopholes instantly, which is another reason I think they'll go with SDC as the test after a one-month grace period (intended to help big businesses engaged in short-term contracting), thereby scaring any sane client. However, if they go with a draconian approach, it will probably be super draconian with a side order of Dark Ages. It's easy to write this in terms of having done work for one client that spans more than a calendar month period within a 12 month period, for example. They aren't completely stupid. They also have the GAAR.

Zero Liability
19th November 2015, 12:05
Do you think if it is a status reporting requirement that 1 month is the lower bound of what they're contemplating? Personally, I wouldn't be surprised if it ended up being 6 months.

jamesbrown
19th November 2015, 13:11
Do you think if it is a status reporting requirement that 1 month is the lower bound of what they're contemplating? Personally, I wouldn't be surprised if it ended up being 6 months.

Possibly, but I think there's less incentive to do this when it's viewed as a lower bound versus an upper bound (one month would be totally unworkable as an upper bound). If it's the latter, I think it will probably be 6 or maybe even 12 months in practice. If it's the former, it will be lower (probably one month, as quoted). However, it's worth bearing that 90% figure in mind (FWIW) and the fraction of contractors whose contracts are, say, less than 6 months, which is high. As I say, my best guess is a lower bound for testing, followed by an SDC test (or some other test) that is pretty tight, which has the merit of being vaguely targeted. There are internal inconsistencies wherever you look though, so we're just killing time...

webberg
19th November 2015, 14:10
It's worth remembering that for a number of tax tests there is an informal (sometimes legislative) 24 month rule in place.

I think there's no particular magic to that period and no particular reason to apply it here but it would have a certain resonance.

My personal view is that a one month period presents a number of practical challenges for all parties. Quite how that might work with RTI and other PAYE rules in particular could be a problem.

jamesbrown
19th November 2015, 14:58
It's worth remembering that for a number of tax tests there is an informal (sometimes legislative) 24 month rule in place.

I think there's no particular magic to that period and no particular reason to apply it here but it would have a certain resonance.

My personal view is that a one month period presents a number of practical challenges for all parties. Quite how that might work with RTI and other PAYE rules in particular could be a problem.

Not really if it's a lower bound after which a test applies. In that case, you'd effectively know upfront whether a contract would pass/fail (and the contract length wouldn't matter, accommodating part-time and fixed price contracts etc.), which is a good thing, in principle. As I say, I can't see a one month rule working as an upper bound to avoid a payroll position or, at least, that anyone would be willing to entertain this in practice. In other words, it wouldn't present a problem at all, because very few people would consider it. Of those left on short-term contracts, you'd have one group on very short-term contracts (no change) and another group on FTCs, which are already used extensively for whatever lengths of time are appropriate. The rest would become regular employees. Likewise, I struggle to see a rule on concurrent contracts working in practice unless withholding is used upfront and over-payments reclaimed later (e.g. offset against CT), because no client would be aware of your wider operation.

billybiro
19th November 2015, 15:49
a perm job with lots of benefits and training etc.

Do these even exist any more?

I'm finding more and more permie people's jobs are just as lacking in benefits and training as the average contractor!

i.e. "Training" is expected to be done by the employee, on their own time and at their own expense - this is especially prevalent in my field of software development. So much so that I've known of permie interviews specifically asking what the candidate does to keep their own skills up to date (implying that the company wants candidates with skills that are kept current but that they have no intention of being the ones to provide that).

Danglekt
19th November 2015, 16:09
They do for the right role - very nice company car, health ins, funded masters with release days, reasonable pension contributions, decent holiday entitlements.

These are all in the art of negotiation if you are the right candidate for a FT role, if you just scrape in then obviously you have less chance of having that discussion, and instead get the company norm, which can be very variable - but some are still good.

LisaContractorUmbrella
20th November 2015, 08:07
I think the one month thing is a bit of a red herring - if we think about the tools that HMRC have now: agency reporting requirements and RTI, they pretty much know who is working for which agency and via which tax vehicle within one month of the contract starting (or thereabouts) so it would be logical for them to ask for a declaration of status within the same period - then they have all the pieces of the jigsaw in one go. Just a thought :grin

webberg
20th November 2015, 09:02
In the thread dealing with responses to the discussion document, I shared the fact that we put forward a time based test on the grounds that in many ways it is easy to measure and apply.

A number of commentators pointed out flaws and problems with that approach. Don't have an issue with that but it might be worth reviewing that thread and applying some of the lessons in this debate?

yakitoo
20th November 2015, 09:52
I think the one month thing is a bit of a red herring - if we think about the tools that HMRC have now: agency reporting requirements and RTI, they pretty much know who is working for which agency and via which tax vehicle within one month of the contract starting (or thereabouts) so it would be logical for them to ask for a declaration of status within the same period - then they have all the pieces of the jigsaw in one go. Just a thought :grin
Pretty well spot on there I think. No need to bother the end client with collection; the agency can do it fairly easily as part of the supply service. Presumably they will need to deduct a little from the invoiced value to pay for it all, but they've got to make a living.............

As a matter of interest, who will be liable for the Employer NI contributions?

LisaContractorUmbrella
20th November 2015, 10:22
Sorry if this is a KUATB but Leaked IR35 plan to hit PSC contractors 'confirmed' :: Contractor UK (http://www.contractoruk.com/news/0012310leaked_ir35_plan_hit_psc_contractors_confir med.html)

Zero Liability
20th November 2015, 10:30
Still sounds like quite a bit, including effective from date, is up in the air. So I'll wait for 25 Nov before drawing any conclusions.

LisaContractorUmbrella
20th November 2015, 10:31
Still sounds like quite a bit, including effective from date, is up in the air. So I'll wait for 25 Nov before drawing any conclusions.

I think you're right :smile

Zero Liability
20th November 2015, 10:42
I think you're right :smile

Besides, General is there for the end of the world, headless chicken panicking. :smile

javadude
20th November 2015, 10:45
Sorry if this is a KUATB but Leaked IR35 plan to hit PSC contractors 'confirmed' :: Contractor UK (http://www.contractoruk.com/news/0012310leaked_ir35_plan_hit_psc_contractors_confir med.html)

So as long as we pass an online test no client payroll... but if that online tests is as sensible as the business entity tests then we're still doomed.

pjt
20th November 2015, 10:46
Sorry if this is a KUATB but Leaked IR35 plan to hit PSC contractors 'confirmed' :: Contractor UK (http://www.contractoruk.com/news/0012310leaked_ir35_plan_hit_psc_contractors_confir med.html)

Looks like they are actually go ahead with this then :tantrum::tantrum::tantrum:

pjt
20th November 2015, 10:47
So as long as we pass an online test no client payroll... but if that online tests is as sensible as the business entity tests then we're still doomed.

The test will be worse the BET, as it will include SDC which will be all but impossible to pass!

LisaContractorUmbrella
20th November 2015, 11:25
Looks like they are actually go ahead with this then :tantrum::tantrum::tantrum:

Note the ' ' around 'confirmed'

pjt
20th November 2015, 11:32
Note the ' ' around 'confirmed'

Theirs too much noise on this for it to go away. Either way we look at it a lot of us have some testing times coming our way!

Zero Liability
20th November 2015, 11:55
It's only 5 days until we get actual confirmation.

Danglekt
20th November 2015, 12:18
You're kidding? I am sure we will go from knowing nothing, to getting a rough idea of the direction, but I'm confident that will just lead to a load more questions rather than any real clarity.

pjt
20th November 2015, 12:20
It's only 5 days until we get actual confirmation.

Am I the only one who feels like a turkey just before Christmas??

Zero Liability
20th November 2015, 12:58
You're kidding? I am sure we will go from knowing nothing, to getting a rough idea of the direction, but I'm confident that will just lead to a load more questions rather than any real clarity.

Never said anything about clarity. :tongue

LisaContractorUmbrella
20th November 2015, 13:20
Someone has just put out the idea that the 'leaked' document APSCo refer to could in fact be the consultation document - this would make perfect sense

MarkT
20th November 2015, 14:15
Someone has just put out the idea that the 'leaked' document APSCo refer to could in fact be the consultation document - this would make perfect sense

I'd be okay with that - on the basis that nothing happens until April 17 and that the CBI, IPSE & APSCo all fight it alongside us, tooth and nail.

pjt
20th November 2015, 14:26
I'd be okay with that - on the basis that nothing happens until April 17 and that the CBI, IPSE & APSCo all fight it alongside us, tooth and nail.

How successful has anyone been in stopping the T&S changes after that consultation. I have a feeling whatever's in that document will come to pass with very few changes.

WordIsBond
20th November 2015, 14:33
How successful has anyone been in stopping the T&S changes after that consultation.
We don't know yet, do we?

MarkT
20th November 2015, 14:40
We don't know yet, do we?

And to be honest - that is no skin off of the CBI and others noses. We are too small to worry about on our own.

If IR35 makes them liable for any taxes, they'll be all over it like a rash.

pjt
20th November 2015, 14:46
We don't know yet, do we?

We don't but the harding stance on IR35 etc certainly suggests they're not looking to give us any relief.

WordIsBond
20th November 2015, 15:03
Well, that "confirmation" is interesting.

One month (big business may succeed in pushing it out to 3 months) before you have to do the ESI. If you fail it, you go on payroll.

I don't see that going through. I could be wrong, but certainly engagers do not want contractors on payroll, and will fight it. They might be willing to pay an additional tax, if it isn't too high, but they don't want contractors on payroll. And I think they have enough power to stop that.

I think they've sort of taken on board that it is an injustice for the worker to pay employer NI. Employer NI is the elephant in the room, the big difference in taxation between contractors and employees, and by any just measure the engager should pay it if the engagement is deemed to be employment.

I wonder if this ends up with something I floated a while back, with a new class of NI.
1. After 1-3 months, engager must check the ESI.
2. If the ESI fails, the contractor is assumed to be under IR35.
3. If the contractor is under IR35, the engager must pay the new class of NI, "engagers NI", say 8%.
4. The contractor has to operate IR35, but IR35 no longer includes employers NI, it's been covered by the engager's NI.

For the engagers, that's not a horrible compromise. They get hit with an additional 8% tax but don't have to put contractors on payroll, with all the employment rights and other hassles involved.

For the contractors, it's yet another hit, it means you can't operate as a normal business with cash management planning, etc. If your fees one year put you in higher rate tax and the next year you're on the bench, you are going to get hammered by higher rate tax anyway, and that's not right that it should be that way. It's still unfair tax treatment, and it will drive some out of contracting. But at least contractors wouldn't be hit with employers NI as well.

Engagers might want to cut prices to recoup their 8%, but it won't work. If almost everyone is under IR35, even if exempt from employers NI, enough will get out of contracting to trigger supply/demand dynamics. Costs will go up, not down. They won't go up enough to make up for the hit on contractors, but they'll go up. Engagers won't be happy.

That's what the economic-illiterates making the decisions can't seem to grasp. They hit contractors with the dividend tax and they are looking to hammer us even more. The hit on dividend tax brings in most of the money they think they are missing while still letting us run our businesses as a business. It doesn't skew the market. But these other proposals are all devastating to the market. They will drive a lot of people out of it or force them to change behaviour. The result is that supply and demand means UK plc is going to have to pay a LOT of money for contractors, and it will hurt the economy.

Idiots.

oliverson
20th November 2015, 19:44
Well, that "confirmation" is interesting.

One month (big business may succeed in pushing it out to 3 months) before you have to do the ESI. If you fail it, you go on payroll.

I don't see that going through. I could be wrong, but certainly engagers do not want contractors on payroll, and will fight it. They might be willing to pay an additional tax, if it isn't too high, but they don't want contractors on payroll. And I think they have enough power to stop that.

I think they've sort of taken on board that it is an injustice for the worker to pay employer NI. Employer NI is the elephant in the room, the big difference in taxation between contractors and employees, and by any just measure the engager should pay it if the engagement is deemed to be employment.

I wonder if this ends up with something I floated a while back, with a new class of NI.
1. After 1-3 months, engager must check the ESI.
2. If the ESI fails, the contractor is assumed to be under IR35.
3. If the contractor is under IR35, the engager must pay the new class of NI, "engagers NI", say 8%.
4. The contractor has to operate IR35, but IR35 no longer includes employers NI, it's been covered by the engager's NI.

For the engagers, that's not a horrible compromise. They get hit with an additional 8% tax but don't have to put contractors on payroll, with all the employment rights and other hassles involved.

For the contractors, it's yet another hit, it means you can't operate as a normal business with cash management planning, etc. If your fees one year put you in higher rate tax and the next year you're on the bench, you are going to get hammered by higher rate tax anyway, and that's not right that it should be that way. It's still unfair tax treatment, and it will drive some out of contracting. But at least contractors wouldn't be hit with employers NI as well.

Engagers might want to cut prices to recoup their 8%, but it won't work. If almost everyone is under IR35, even if exempt from employers NI, enough will get out of contracting to trigger supply/demand dynamics. Costs will go up, not down. They won't go up enough to make up for the hit on contractors, but they'll go up. Engagers won't be happy.

That's what the economic-illiterates making the decisions can't seem to grasp. They hit contractors with the dividend tax and they are looking to hammer us even more. The hit on dividend tax brings in most of the money they think they are missing while still letting us run our businesses as a business. It doesn't skew the market. But these other proposals are all devastating to the market. They will drive a lot of people out of it or force them to change behaviour. The result is that supply and demand means UK plc is going to have to pay a LOT of money for contractors, and it will hurt the economy.

Idiots.

The whole thing is so ****ed up and the writing is on the wall, and the ceiling and the floor, that contracting is dead and buried. Thanks you tory cnuts. Spain here I come. Bye bye 'great' Britain. That's £ 50k less per annum for the chancellor.

Contreras
20th November 2015, 20:24
Nobody will be on the client's payroll. That's a nonsense. But it'll probably mean having to give in on IR35, or maybe even being forced to use an approved umbrella rather than our own Limiteds.

...or a new corporate entity, taxed differently to Ltds.

JB3000
20th November 2015, 21:15
I don't see that going through. I could be wrong, but certainly engagers do not want contractors on payroll, and will fight it. They might be willing to pay an additional tax, if it isn't too high, but they don't want contractors on payroll. And I think they have enough power to stop that.



Contractors will not necessarily need to go onto the client's payroll.

They could go onto the agency payroll, or umbrella payroll or their own ltd company payroll and tick the ir35 box when they do their ltd company year end payroll submission.

BolshieBastard
20th November 2015, 22:23
Contractors will not necessarily need to go onto the client's payroll.

They could go onto the agency payroll, or umbrella payroll or their own ltd company payroll and tick the ir35 box when they do their ltd company year end payroll submission.

There's far too much speculation and wishful thinking going on. No one has a clue.

But, the writing was on the wall since the Goverment brought these off payroll rules into the Public Sector. Its just a question of when they bringit in to the Private Sector as they surely will unless big business kicks up shit.

Personally, I dont see how the one month thing will work if they bring it in. What 'employment' vehicle are you supposed to use, a limited? So you have a contract for 13 weeks and for 4 and a bit you work via your limited and the rest including extensions taking you to a year is on payroll? Who's going to run a limited for 1 month in a 12 month period?

JB3000
21st November 2015, 07:49
There's far too much speculation and wishful thinking going on. No one has a clue.

But, the writing was on the wall since the Goverment brought these off payroll rules into the Public Sector. Its just a question of when they bringit in to the Private Sector as they surely will unless big business kicks up tulip.

Personally, I dont see how the one month thing will work if they bring it in. What 'employment' vehicle are you supposed to use, a limited? So you have a contract for 13 weeks and for 4 and a bit you work via your limited and the rest including extensions taking you to a year is on payroll? Who's going to run a limited for 1 month in a 12 month period?

You would just continue to be on the agency payroll, umbrella payroll or your own company payroll inside of IR35 for the remaining 11 months. The choice is yours. HMRC would know which payroll you were on via the employers intermediary report from the agency.

WordIsBond
21st November 2015, 13:21
the writing is on the wall, and the ceiling and the floor, that contracting is dead and buried.
Might be good for us all to remember one central truth -- contracting doesn't exist for our benefit, to make us rich.

It exists for the benefit of the clients, because it allows them to complete projects efficiently and in a cost-effective way relative to hiring permies. If it didn't do that, there would be no contracting no matter how much we wanted to do it.

The need for clients to complete those projects isn't going away. The extra expense involved in hiring permies isn't going away. They keep giving employees more rights, not fewer.

As long as government keeps insisting that employers have to do A, B, C and can't do X, Y, Z, and those lists keep getting longer, contracting is going to exist, and is going to be pretty lucrative. It may change, taxation and other regulations may make us pay more tax, but the demand is always going to be there. And if some go to Spain or somewhere else, there will be less supply and more demand, and we know where that leads.

Every additional employment regulation that government comes up with means more demand for contractors.

So off you go to Spain. Just means higher fees for everyone else to help mitigate the nasty tax grab.

MarkT
21st November 2015, 14:00
You would just continue to be on the agency payroll, umbrella payroll or your own company payroll inside of IR35 for the remaining 11 months. The choice is yours. HMRC would know which payroll you were on via the employers intermediary report from the agency.

Well if I can't go in with a few other contractors and take dividends on that company, I'll just go it alone, go onto my own payroll via my Ltd and await a change. I'm not going onto anyones payroll, not without the full benefits. Salary, Bonus, holiday, the lot.

My contracts are usually 6 months or so, I'd imagine the 1 month is extended to a time limit nearer that anyway.

JB3000
21st November 2015, 23:42
Might be good for us all to remember one central truth -- contracting doesn't exist for our benefit, to make us rich.

It exists for the benefit of the clients, because it allows them to complete projects efficiently and in a cost-effective way relative to hiring permies. If it didn't do that, there would be no contracting no matter how much we wanted to do it.

The need for clients to complete those projects isn't going away. The extra expense involved in hiring permies isn't going away. They keep giving employees more rights, not fewer.

As long as government keeps insisting that employers have to do A, B, C and can't do X, Y, Z, and those lists keep getting longer, contracting is going to exist, and is going to be pretty lucrative. It may change, taxation and other regulations may make us pay more tax, but the demand is always going to be there. And if some go to Spain or somewhere else, there will be less supply and more demand, and we know where that leads.

Every additional employment regulation that government comes up with means more demand for contractors.

So off you go to Spain. Just means higher fees for everyone else to help mitigate the nasty tax grab.

+1

m0n1k3r
23rd November 2015, 12:16
Yea ... bla, bla,bla ... Like most companies wouldn't be allover something that reduces costs.

Ok, so it all comes to pass ... It will be quite amusing to see what Crapita starts quoting for these "run of the mill" contractors. 1K a day for Linux/Unix contractors will soon change a companies mind.

I think we will just see people doing less for less. Why knock yourself out traveling or taking on a difficult contract if you are paying more than 50% tax? Also there will be no fresh supply of permies to keep rates down.

This is going to be an expensive year for a lot of companies. I fully agree that if you go back to a company and ask for more you will not get it. But when they need to replace you or get more resource in, that will be when it hits home. -- Around June next year is my prediction.

Not necessarily. My prediction is that it will drive outsourcing and offshoring. Those companies are eager for more business, and many companies will probably re-think whether they really need people on site.

WordIsBond
23rd November 2015, 15:57
Not necessarily. My prediction is that it will drive outsourcing and offshoring.
And then the always-thoughtful British press will run stories about the evil corporations offshoring work and putting British people out of work, with never a consideration that it is in response to government actions which they encourage and applaud.

And after a few get horrible publicity and their non-exec directors lose their knighthoods and peerages, the rest will make sure they keep a quota of British contractors engaged.

And so a new set of business villains will be created, uncovered, and pilloried, and damage will have been done to British business again, and the ever-vigilant opposition will scream about employment rates and pay but never, ever say anything about the government stupidity of these tax changes.

And an economic equilibrium will be achieved, once again, and good contractors will still do well for themselves on both a before and after tax basis. And in 2020, a government will achieve or retain power based not on sound economic management but on who is best at presenting a narrative which the masses will buy.

Lather, rinse, repeat.

And then at some future date I will go retire in the South Pacific and find it hard to care overmuch when the house of cards finally collapses.

The end.