Does anyone else feel like they are being financially ripped by the tax-man

[eek]

Those on £15k will hardly have to pay any tax at all.
In any case, you have clearly missed the point entirely, how can paying 56% tax, leaving you with 44%, be considered fair or right! The Tax Man is never greedy right?
I'm all for paying tax - but it needs to be reasonable and fair - otherwise what is the point in aspiring to do well in life.
When over half your income is going in tax!
And as for 40 hours, you have no idea of the hours I put in.
So if you think I'm being greedy for having the temerity to have the greater share of my hard earned - then wait till you find about how much tax the likes of Amazon, Google etc pay - yet HMRC doesn't appear to be going after them - HMRC showing just how fair they are!

15% of the tax is hidden from employees - Employer NI has been increased over the years because it was just about the only thing that can be increased when a Government has said income tax, employee NI and VAT won't be changing.

And I will repeat this again Employer NI and keeping it coming in is the sole reason for this change, they don't want employers abusing it by pretending their staff are "self employed contractors".

Thanks for the rough estimate, that is an eye-watering amount and would certainly have me worried. Currently looking at some IR35 insurance to cover just in case. Accountant reckons if ltd co is closed down (MVL etc) then makes it harder for HMRC.

You won't legimately get IR35 insurance as your client has already stated they feel you were inside.

As for closing it down that may help, it may not - I suspect it would depend on whether you stayed or not - as the question becomes would HMRC see it as Fraud. Leave and you could probably argue it wasn't, stay and I really, really wouldn't want to be the person trying to argue your outside determination prior to April 2020 wasn't...

Quick side question, did you have IR35 contract reviews for any contracts or renewals up to now?

Edit - sorry for the lack of cheery advice - it's a very large sum of money you would be arguing over...

[GhostofTarbera]

Apologies for the use of language - it's the only thing that I could think of to describe the brutality of the situation being faced re: IR35.

Have been given Inside IR35 SDS by client, who just went through the HMRC CEST tool and have been told to use an Umbrella post April.

I've been going through the figures and it is horrific.

Have a day rate of £500, take home is looking around 55%!
With lots of evening and weekend, I can push the day rate to equivalent of £700-750 - which brings take home down to 52%! (The figures don't include pension contributions etc - I don't have one)

So for ~5.5-6 months - almost half of the year! - every penny I earn is going straight to the Tax Man! - How on earth is that fair? - how do they call that paying "your fair share of taxes!"

Not only that, where I live, I have never found anything local, all contracts are quite far away and require accommodation during the week. Taking into account accommodation and travel expenses (which are no longer claimable), the actual take home comes down to around 44%!

I am losing the will to live! Working away from family during the week along with putting in very long hours is the sacrifice one makes to strive towards a better quality of life and providing a better start for the children so they don't have to go through the hardships.

Sorry about the post, just needed somewhere to share my frustration (putting it politely) at the given situation.

This is a massive double whammy - not only the tax side - but this will force me to look for only local contracts to keep expenses down. These are few and far between. My previous time between contracts was 7 months!

Yes


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[LondonManc]

Those on £15k will hardly have to pay any tax at all.
In any case, you have clearly missed the point entirely, how can paying 56% tax, leaving you with 44%, be considered fair or right! The Tax Man is never greedy right?
I'm all for paying tax - but it needs to be reasonable and fair - otherwise what is the point in aspiring to do well in life.
When over half your income is going in tax!
And as for 40 hours, you have no idea of the hours I put in.
So if you think I'm being greedy for having the temerity to have the greater share of my hard earned - then wait till you find about how much tax the likes of Amazon, Google etc pay - yet HMRC doesn't appear to be going after them - HMRC showing just how fair they are!

Wow, how much tax do you want the poor sods on £15k to pay?

£110,000 equates to about 70k after tax, surely? Excluding pension contributions but that's not going to the tax man.
Income tax calculator: Find out your take-home pay - MSE

Why are you putting more than 40 hours in? Bad business model if you're on a day rate.

As for Amazon, etc, HMRC have a different battle to fight there. They can afford better lawyers and accountants for starters (not that I disagree that there shouldn't be some sort of sales tax of, say, 1% to be paid to the tax authority of whichever country the purchase was made in to help compensate for that country's shops losing out).

[eek]

Wow, how much tax do you want the poor sods on £15k to pay?

£110,000 equates to about 70k after tax, surely? Excluding pension contributions but that's not going to the tax man.
Income tax calculator: Find out your take-home pay - MSE

Why are you putting more than 40 hours in? Bad business model if you're on a day rate.

As for Amazon, etc, HMRC have a different battle to fight there. They can afford better lawyers and accountants for starters (not that I disagree that there shouldn't be some sort of sales tax of, say, 1% to be paid to the tax authority of whichever country the purchase was made in to help compensate for that country's shops losing out).

A tax 2% of turnover for digital marketplaces and digital advertising display boards (google, facebook) from April was in the budget..

[GummiBear]

15% of the tax is hidden from employees - Employer NI has been increased over the years because it was just about the only thing that can be increased when a Government has said income tax, employee NI and VAT won't be changing.

And I will repeat this again Employer NI and keeping it coming in is the sole reason for this change, they don't want employers abusing it by pretending their staff are "self employed contractors".

Yes, I saw a few of your posts on other threads referencing Employers NI as the main driver behind IR35. Hadn't occurred to me, but certainly does put it in perspective. I think you mentioned it was the NI team at HMRC who were the driving force behind IR35.

You won't legimately get IR35 insurance as your client has already stated they feel you were inside.

As for closing it down that may help, it may not - I suspect it would depend on whether you stayed or not - as the question becomes would HMRC see it as Fraud. Leave and you could probably argue it wasn't, stay and I really, really wouldn't want to be the person trying to argue your outside determination prior to April 2020 wasn't...

Quick side question, did you have IR35 contract reviews for any contracts or renewals up to now?

Edit - sorry for the lack of cheery advice - it's a very large sum of money you would be arguing over...

Unfortunately, I hadn't had any IR35 contract reviews - when I first got the gig it was only a 3 month - and it was made quite clear there was not going to be any extension - so in no way did I ever expect it to last as long as it has.

I have currently paid for a QDOS review, which I'm currently waiting to hear back from, think they are inundated at the moment.

[CosmicWave]

Yes, I saw a few of your posts on other threads referencing Employers NI as the main driver behind IR35. Hadn't occurred to me, but certainly does put it in perspective. I think you mentioned it was the NI team at HMRC who were the driving force behind IR35.



Unfortunately, I hadn't had any IR35 contract reviews - when I first got the gig it was only a 3 month - and it was made quite clear there was not going to be any extension - so in no way did I ever expect it to last as long as it has.

I have currently paid for a QDOS review, which I'm currently waiting to hear back from, think they are inundated at the moment.

Given all that, I would not be thinking too much on the fairness aspect of taxation etc., rather you should be seriously, and I mean it, very seriously thinking about what you are going to do for all the tax, NIs, + potentially penalties (since you did not do your due diligence by not doing any independent reviews of the contract + WPs) + interest thereof, for all of the 4 years' worth of now deemed salaries (400K+ ?), given your client, well, employer, has clearly said you were Inside IR 35 all along, when HMRC comes calling?

Your point that you did not think the contract was not going to extend beyond 3 months every single time until 4 years, is not going to cut it with anybody, let alone HMRC, unfortunately... so you need to drop that thinking / argument for good.

Also, paying for any insurance now after having received the SDS, is not going to help at the point any claim for this contract - I doubt if QDOS will even offer you the insurance for the contract, if you tell them about the 4 years saga + SDS you have now.

[northernladuk]

Given all that, I would not be thinking too much on the fairness aspect of taxation etc., rather you should be seriously, and I mean it, very seriously thinking about what you are going to do for all the tax, NIs, + potentially penalties (since you did not do your due diligence by not doing any independent reviews of the contract + WPs) + interest thereof, for all of the 4 years' worth of now deemed salaries (400K+ ?), given your client, well, employer, has clearly said you were Inside IR 35 all along, when HMRC comes calling?

Your point that you did not think the contract was not going to extend beyond 3 months every single time until 4 years, is not going to cut it with anybody, let alone HMRC, unfortunately... so you need to drop that thinking / argument for good.

Also, paying for any insurance now after having received the SDS, is not going to help at the point any claim for this contract - I doubt if QDOS will even offer you the insurance for the contract, if you tell them about the 4 years saga + SDS you have now.

All very true. The OP might have had a justified rant but now turns out he's actually exactly why HMRC have done this. 3 months turned in to 4 years and you just carried on regardless. It's no wonder they think we are just disguised permies.

If I were you I'd be more concerned that you are right at the very top of HMRCs hit than complaining about all the taxes and money you are going to lose by going inside....which arguably you should done all along.

4 years in and not a hope of passing an inspection, the the client confirms it and no insurance. Jeez, they will think they've hit the jackpot.

Why are you getting a contract review done. Hand your notice in and get the f**k out of there.

[eek]

Why are you getting a contract review done. Hand your notice in and get the f**k out of there.

Because - Money

[northernladuk]

Because - Money

Ah.. that stuff he's going to lose a hell of a lot of if the worst does happen. Gotcha

[NotAllThere]

HMRC determine what is fair - and can decide so retrospectively.

It's fair™