Like many contractors I'm coming to terms with the financial implication of the new IR35 regulations . Contracting in large Financial services organisation that has performed their blanket version of CEST, the only options for most people are Umbrella or out. And 'Out' is not a particularly nice place to be given the uncertain job market at the moment.
There is a political fight against IR35 and I applaud that, but given the hideous comments by Jesse Norman in parliament the other day and Javid trying to forget any promises he made prior to the election, I don't see much immediate hope in getting a repeal.
What I do see as a potential target is the injustice of the Employer NI tax (translated by Umbrellas into Employment Expense). I don't blame Umbrella or Agencies for passing this tax on, they probably couldn't survive if they had to pay it, but it is wrong that contractors, who have now lost their limited company director status, being treated as Employers.
The amount of this tax could easily be up £7K and £10K per year depending on your daily rate. This figure was never in the rate agreed with the client/agency and at the moment the clients don't intend to increase rates to pay for it.
But the client companies should pay this money. They are the nearest entity to an Employer in this whole mess. They are forcing the Umbrellas to fake an Employer status to skate around Employment Law. It was the intention of the original law regarding the employee/employee split in the National Insurance Act , that those people who benefit from an employees work should share the burden of NI. This has not changed.
The big Financial companies have made no protest about the IR35 changes. I suspect because they prefer the government to be looking at contractors tax affairs rather than their own, but this NI has to be changed.
I suspect there will be some interesting Employment Tribunal cases in the coming years, where contractors will demand the Employers NI back from their actual employer
If anyone knows if there is a specific campaign I would love to hear.
There is a political fight against IR35 and I applaud that, but given the hideous comments by Jesse Norman in parliament the other day and Javid trying to forget any promises he made prior to the election, I don't see much immediate hope in getting a repeal.
What I do see as a potential target is the injustice of the Employer NI tax (translated by Umbrellas into Employment Expense). I don't blame Umbrella or Agencies for passing this tax on, they probably couldn't survive if they had to pay it, but it is wrong that contractors, who have now lost their limited company director status, being treated as Employers.
The amount of this tax could easily be up £7K and £10K per year depending on your daily rate. This figure was never in the rate agreed with the client/agency and at the moment the clients don't intend to increase rates to pay for it.
But the client companies should pay this money. They are the nearest entity to an Employer in this whole mess. They are forcing the Umbrellas to fake an Employer status to skate around Employment Law. It was the intention of the original law regarding the employee/employee split in the National Insurance Act , that those people who benefit from an employees work should share the burden of NI. This has not changed.
The big Financial companies have made no protest about the IR35 changes. I suspect because they prefer the government to be looking at contractors tax affairs rather than their own, but this NI has to be changed.
I suspect there will be some interesting Employment Tribunal cases in the coming years, where contractors will demand the Employers NI back from their actual employer
If anyone knows if there is a specific campaign I would love to hear.
R.
Comment