What are your clients doing with IR35 reform?

[jamesbrown]

As I understand it the insurance product will now cover the fee-payer & engager. They are encouraging the cost to be borne by the contractor (as they benefit from working outside). We are asking clients to foot the cost, we cover it for anyone we payroll if it's above a certain level.

Interesting, thanks.

[northernladuk]

All this extra cost to the client and more duties carried out by the agents etc etc. Looks like contracting is going to be even less attractive to clients via an agency and surely will be ultimately reflected in day rates.

Greedy agents are going to have an even worse rep than they have already.

[JoJoGabor]

So I still have a couple of questions...

If you go permie and the role stays the same, is there a high risk that your contracts in the same role will automatically be deemed inside IR35?

If this is the case,now it the PSC or the end client who would be responsible for paying the tax owed?

Using a few take home calculators, it seems you pay about 45% (!!!!!) Of that in tax. If you are permie, you would only pay about 31% tax. This is comparing 550/day Vs 80k permie. Huge differential in tax. Given that, won't clients be better offering fixed term contracts for say 6 months. So you pay PAYE tax, but clients get to take advantage of temporary staff, no concerns about IR35 for either party, and clients pay a bit more to use a temporary resource. Fixed-term employment contracts and contracting are mutually exclusive

[mogga71]

So I still have a couple of questions...

If you go permie and the role stays the same, is there a high risk that your contracts in the same role will automatically be deemed inside IR35?

If this is the case,now it the PSC or the end client who would be responsible for paying the tax owed?

Using a few take home calculators, it seems you pay about 45% (!!!!!) Of that in tax. If you are permie, you would only pay about 31% tax. This is comparing 550/day Vs 80k permie. Huge differential in tax. Given that, won't clients be better offering fixed term contracts for say 6 months. So you pay PAYE tax, but clients get to take advantage of temporary staff, no concerns about IR35 for either party, and clients pay a bit more to use a temporary resource. Fixed-term employment contracts and contracting are mutually exclusive

My understanding is that anybody who flips to permie come April 2020 will not be investigated for prior contracts.

That would be like , ok we have forced you out of contracting, and now that you are a permie we have therefore proved that you were actually inside IR35 all the time .... so cough up please. I seriously doubt that would happen .... even for HMRC.

Also, if you are earning 550/day ... that's more like 110k salary ... not 80k.

[JoJoGabor]

My client are converting rates to a salary by using 141xday rate. So those are the sums available to me

[Grasser73]

My understanding is that anybody who flips to permie come April 2020 will not be investigated for prior contracts.

Is that prior contracts with that client only or all contracts period though?

[northernladuk]

Is that prior contracts with that client only or all contracts period though?

These are complex times. You've got to try understand it a little better that.

[JohntheBike]

My understanding is that anybody who flips to permie come April 2020 will not be investigated for prior contracts.

That would be like , ok we have forced you out of contracting, and now that you are a permie we have therefore proved that you were actually inside IR35 all the time .... so cough up please. I seriously doubt that would happen .... even for HMRC.

Also, if you are earning 550/day ... that's more like 110k salary ... not 80k.

when it comes to increasing the tax take, I wouldn't rule out any HMRC behaviour.

[mogga71]

My client are converting rates to a salary by using 141xday rate. So those are the sums available to me

That number is way, way too low. Just off the top of my head and not to be taken too seriously .... contracting outside IR35 with even just 500 per day has

38K Dividends
9K Salary
40k Pension

...all without paying tax (not including Corporation tax).

So basically you need a salary that will cover that IMO.

[northernladuk]

That number is way, way too low. Just off the top of my head and not to be taken too seriously .... contracting outside IR35 with even just 500 per day has

38K Dividends
9K Salary
40k Pension

...all without paying tax (not including Corporation tax).

So basically you need a salary that will cover that IMO.

No you don't. There are other benefits that add to the total package like pensions, holiday, sick, bonus and the like. It's hard enough to compare the two without taking such a simplistic approach. Means nothing those numbers.