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AtW
30th October 2017, 17:21
Philip Hammond eyes £1bn budget raid on freelancers

The chancellor is considering a £1bn raid on freelance workers in a new blitz against “disguised employment” in the private sector.

The mooted crackdown could force businesses to add tens of thousands of self-employed staff to their payroll, driving up their tax bills.

The move — which could be unveiled by Philip Hammond in next month’s budget — is aimed at levelling the playing field between salaried staff and freelancers, who enjoy significant tax advantages if they work as independent contractors.

Repost from original thread posted here: http://forums.contractoruk.com/future-contracting/124507-november-22nd-death-contracting-we-know.html

Original source of Tory Brexit No Deal DOOM™: https://www.thetimes.co.uk/edition/business/philip-hammond-eyes-1bn-budget-raid-on-freelancers-9bm6lsjs6

Happy about that Brexit vote, Brexiters? :mad

jamesbrown
30th October 2017, 17:24
KUATB (http://forums.contractoruk.com/future-contracting/124507-november-22nd-death-contracting-we-know.html).

Edit: OK, I see you added a link. :D

Waldorf
30th October 2017, 17:27
If he proceeds with this it will not be because of Brexit. There is a huge pressure to spend more on various items.

Clearly there is also an argument for taxes to be levelled out, why is a contractor paying less tax than a employed colleague? This is his it would be sold and it’s hard to argue against.

sasguru
30th October 2017, 17:29
[b]
Happy about that Brexit vote, Brexiters? :mad

How does this affect the permie losers on here who voted for Brexit in the mistaken expectation that their jobs were safe?
I really do hope there's a hard no-deal Brexit. How I'd :laugh:laugh:laugh

sasguru
30th October 2017, 17:30
Clearly there is also an argument for taxes to be levelled out, why is a contractor paying less tax than a employed colleague? .

:rolleyes: I rest my case.

mattfx
30th October 2017, 17:30
Yes, we enjoy very significant tax advantages. We also spend months on the bench, have stress at the end of every single gig not knowing if we will have another to go on to, are put through far more rigorous interview processes and generally speaking work harder. I really do not see why the chancellor wishes to punish a legitimate group of hard working individuals.

Mordac
30th October 2017, 17:34
Yes, we enjoy very significant tax advantages. We also spend months on the bench, have stress at the end of every single gig not knowing if we will have another to go on to, are put through far more rigorous interview processes and generally speaking work harder. I really do not see why the chancellor wishes to punish a legitimate group of hard working individuals.

Not as significant or advantageous as they used to be...:eyes

SueEllen
30th October 2017, 17:35
Yes, we enjoy very significant tax advantages. We also spend months on the bench, have stress at the end of every single gig not knowing if we will have another to go on to, are put through far more rigorous interview processes and generally speaking work harder. I really do not see why the chancellor wishes to punish a legitimate group of hard working individuals.

I guess I must just get used to signing on after every contract.

And I will to prove a fecking point after whining to my Tory MP.

If I'm sick between contracts due to primary care being completely useless then I will just go into the dole offices and collapse at least I will then have a legit reason for being in A&E.

SueEllen
30th October 2017, 17:37
Not as significant or advantageous as they used to be...:eyes

Spreadsheet Phil needs to put up dividend tax.

While it will p*ss of contractors it won't p*ss of big business.

Other countries e.g. Germany have worked out how to extract money from contractors without p*ssing of big business.

xoggoth
30th October 2017, 17:57
Fair enough provided of course contractors get paid holidays, sick pay, access to HR resources, sports club membership, pensions & PAYE all done for them, stop having to fill in F* tax returns etc. etc. etc. Beats me why politicians are so ignorant of the facts.

tomtomagain
30th October 2017, 18:00
Clearly there is also an argument for taxes to be levelled out, why is a contractor paying less tax than a employed colleague? This is his it would be sold and it’s hard to argue against.


Because the contractor :
Has no employment rights
Gets no paid holiday
Gets no sick pay
Gets no company pension
Gets no redundancy
Is a short-term, skilled-employee and therefore commands a premium
Gets no training
Expects no career progression


Those are my arguments against.

AtW
30th October 2017, 18:00
Spreadsheet Phil needs to put up dividend tax.

:eek

It's already close to income tax levels (when corp tax is factored in).

washed up contractor
30th October 2017, 18:23
Because the contractor :
Has no employment rights
Gets no paid holiday
Gets no sick pay
Gets no company pension
Gets no redundancy
Is a short-term, skilled-employee and therefore commands a premium
Gets no training
Expects no career progression


Those are my arguments against.

6 of those bullet points are available to contractors via their own limited company. The fact you decide to fore go them from your limited co is a personal choice.

You have employment rights with your limited co. Why should the client company give you paid holiday, sick pay, pension scheme, redundancy terms or training?

SueEllen
30th October 2017, 19:16
:eek

It's already close to income tax levels (when corp tax is factored in).

But that's the entire point.

A chancellor with intelligence would work out how to screw us without annoying big business, ensuring p*ssed off people like me wouldn't moan to our Tory MPs and then take the chance to sign on at every opportunity.

BR14
30th October 2017, 20:34
But that's the entire point.

A chancellor with intelligence would work out how to screw us without annoying big business, ensuring p*ssed off people like me wouldn't moan to our Tory MPs and then take the chance to sign on at every opportunity.

HEAR! HEAR!

Hobosapien
31st October 2017, 09:08
6 of those bullet points are available to contractors via their own limited company. The fact you decide to fore go them from your limited co is a personal choice.

You have employment rights with your limited co. Why should the client company give you paid holiday, sick pay, pension scheme, redundancy terms or training?


That's the argument for maintaining enough of a tax gap between permie and contractor so the Ltd can pay those benefits and the contractor doesn't lose out in take home pay.

So to maintain that gap, contractors need to get increased rates to make it worthwhile not going permie from a pay perspective (ignoring the other benefits of not being a permie such as performance reviews and other office bollox), like some/many have been able to do recently from the public sector.

With the divi tax and other restrictions on Ltd based contractors caught by IR35 it then becomes a choice between Ltd covering those benefits or going via brolly that offers those benefits. The bottom line being the client has a regular payment to make for a resource, whether it be direct contractor, contractor via agency, contractor via agency/brolly, or permie. They all cost an amount and sometimes the flexibility of not having permies twiddling their thumbs week in week out between projects is worth the short term increase in costs, which is why contracting has been popular with clients and rewarding for contractors for so long.

The government only do what they are told by those funding their parties or offering them opportunities after their stint as an MP in parliament, so the future of contracting depends on the goals of those with real power over the government, and I'm not talking about those :tumble: at AIPSE.

Jog On
31st October 2017, 09:48
Quoting from the original article in the other thread (http://forums.contractoruk.com/future-contracting/124507-november-22nd-death-contracting-we-know.html):


The Treasury is targeting IT contractors, consultants and other freelancers who are paid through “personal service companies”. Currently, it is up to the workers to pay the correct personal tax and national insurance contributions. HM Revenue & Customs believes that most of them do not comply in full.

It's the same old language again - and I'll ask again what exactly - as defined by law - are 'the correct personal tax and national insurance contributions'? It's a bit like expenses isn't it where we get told things like "Try not to go over x amount otherwise it could be classed as entertainment"

No - what are the exact rules in black and white as defined in law? I won't accept shaming or wooly language around their interpretations of shoulds and shouldn'ts. BUt they won't because this is how they selectively decide who's in the club and who isn't. Oh and this as well:


But it would also hand a cash boost to Hammond, who is scrambling to fund public sector pay rises and to increase spending on the NHS and social care.

So he wants me to take on the risk and admin of providing flexible skills with no HR overhead for end client and take away what makes it worth doing - just to score points in an attempt to keep his job and try and win the next election? Nice play of the NHS/social care card as well. Spare a thought for the war industry shareholders with billions in offshore havens as well - those super yachts don't pay for themselves you know. :violin:

So we'll form micro consultancies and provide services for specific bits of work - or go perm or move abroad or go plan B. Maybe we'll get publicly shamed in the media soon...

SueEllen
31st October 2017, 10:26
Quoting from the original article in the other thread (http://forums.contractoruk.com/future-contracting/124507-november-22nd-death-contracting-we-know.html):



It's the same old language again - and I'll ask again what exactly - as defined by law - are 'the correct personal tax and national insurance contributions'? It's a bit like expenses isn't it where we get told things like "Try not to go over x amount otherwise it could be classed as entertainment"

No - what are the exact rules in black and white as defined in law? I won't accept shaming or wooly language around their interpretations of shoulds and shouldn'ts. BUt they won't because this is how they selectively decide who's in the club and who isn't. Oh and this as well:



So he wants me to take on the risk and admin of providing flexible skills with no HR overhead for end client and take away what makes it worth doing - just to score points in an attempt to keep his job and try and win the next election? Nice play of the NHS/social care card as well. Spare a thought for the war industry shareholders with billions in offshore havens as well - those super yachts don't pay for themselves you know. :violin:

So we'll form micro consultancies and provide services for specific bits of work - or go perm or move abroad or go plan B. Maybe we'll get publicly shamed in the media soon...

He's a fool.

Has he been talking to Brown?

SueEllen
31st October 2017, 10:27
Oh hello HMRC :wave: Maybe you should get your Treasury friends on here.

KentDogWalker
31st October 2017, 10:28
this countries tax laws, sheesh

Pip in a Poke
31st October 2017, 14:59
That's the argument for maintaining enough of a tax gap between permie and contractor so the Ltd can pay those benefits and the contractor doesn't lose out in take home pay.

So to maintain that gap, contractors need to get increased rates to make it worthwhile not going permie from a pay perspective (ignoring the other benefits of not being a permie such as performance reviews and other office bollox), like some/many have been able to do recently from the public sector.

With the divi tax and other restrictions on Ltd based contractors caught by IR35 it then becomes a choice between Ltd covering those benefits or going via brolly that offers those benefits. The bottom line being the client has a regular payment to make for a resource, whether it be direct contractor, contractor via agency, contractor via agency/brolly, or permie. They all cost an amount and sometimes the flexibility of not having permies twiddling their thumbs week in week out between projects is worth the short term increase in costs, which is why contracting has been popular with clients and rewarding for contractors for so long.

The government only do what they are told by those funding their parties or offering them opportunities after their stint as an MP in parliament, so the future of contracting depends on the goals of those with real power over the government, and I'm not talking about those :tumble: at AIPSE.

Correct me if I'm wrong but if they implement the PS rules in the private sector, you're not going to be able to operate through a LTD if you're IR35 caught.

Am I right?

And this, of course, means you won't be able to mitigate your tax liability by throwing money at your company pension as you can under the current rules when IR35 caught within the private sector.

Hobosapien
31st October 2017, 16:31
Correct me if I'm wrong but if they implement the PS rules in the private sector, you're not going to be able to operate through a LTD if you're IR35 caught.

Am I right?

Yes I think so, if they implement the same PS rules. I was working on the basis of the current rules, as god knows what tulips they'll plant in the budget for private sector.


And this, of course, means you won't be able to mitigate your tax liability by throwing money at your company pension as you can under the current rules when IR35 caught within the private sector.

No, not via Ltd company pension but, unless they change the rules, can still do salary sacrifice style contributions pre-tax via brolly/agency payroll (if offered) to still take advantage of that tax break while it exists.

Pip in a Poke
1st November 2017, 09:15
No, not via Ltd company pension but, unless they change the rules, can still do salary sacrifice style contributions pre-tax via brolly/agency payroll (if offered) to still take advantage of that tax break while it exists.

But will I be able to keep paying into my existing pension scheme or will I have to go with whatever provider the brolly / agency uses?

If the latter case, my pension plan could end up very fragmanted because there will be situations where I will have to be on a different agency's / brolly's payroll on a contract by contract basis.

tomtomagain
1st November 2017, 12:15
You have employment rights with your limited co. Why should the client company give you paid holiday, sick pay, pension scheme, redundancy terms or training?

They shouldn't. They should pay a premium to the LTD company so that it can provide those benefits to its staff.

My gripe isn't with the client. It's with HMRC.

Hobosapien
1st November 2017, 15:42
But will I be able to keep paying into my existing pension scheme or will I have to go with whatever provider the brolly / agency uses?

If the latter case, my pension plan could end up very fragmanted because there will be situations where I will have to be on a different agency's / brolly's payroll on a contract by contract basis.


There may be more (accurate :eyes) info in the appropriate sub forum, but I think you'll not be able to use your existing pension scheme and will have to use the brolly's. Not sure if anyone has been able to get an agency to offer payroll cost effectively so maybe brolly is the only sensible option.

At the end of the contract I think you can transfer or take ownership of your pension contributed to via the brolly as it's independent and set up in your name, so no long term issues if the brolly closes.

It may be easier to use same brolly whenever one is required if moving between Ltd and brolly, while that makes sense. Then can contribute to same pension pot.

Though having multiple pots with different entities may be safer in the long term, and also a form of balancing the investment in case one provider has a bad run.

Stevie Wonder Boy
1st November 2017, 19:44
He's a fool.

Has he been talking to Brown?

He is the son of Osborne who is the son of Brown. - When the money finally runs out they will be forced to form an actual Conservative Government and cut the size of the beast. It's just one tax rise after another.

Stevie Wonder Boy
1st November 2017, 19:48
They shouldn't. They should pay a premium to the LTD company so that it can provide those benefits to its staff.

My gripe isn't with the client. It's with HMRC.

What is really bizarre is the the Labour party brought in the two year rule for Ltd company director travel expenses. It's hard to believe they would just decide to do over 200K contractors and expect this not to have a significant impact.

If Hammond does go for it, I get the feeling this will be the last thing he does before he is sacked. This will go wrong quickly.