Contractors: IR35 & general discussion

[hyphen]

I have looked through public sector roles posted online recently, and loads of outside ir35 ones.

A very quick look found roles such as a childcare lawyer
https://www.publiclawjobs.co.uk/display-job/11345/...

social worker:
https://jobs.communitycare.co.uk/job/1401657001/ch...

And a planning officer
https://jobs.planningresource.co.uk/job/349083/pri...

Another planning one
https://jobs.planningresource.co.uk/job/349199/pla...

Enforcement officer
https://www.carringtonwest.com/job/senior-planning...

Building surveyor
https://www.ricsrecruit.com/job/176499/building-su...

Clerk of works
https://www.matchtech.com/job/EMP445756/senior-cle...
And more.

Environmental health officer

https://www.ehn-jobs.com/job/324345/environmental-...

So if roles such as these, which to the layman such as me, appear as BAU, are outside ir35 in the public sector, why are people so determined to call 'toast' on the private sector?

Things will settle down people, stop panicking.

Edited by hyphen on Saturday 19th October 23:37

[Bluedot]

Countdown said:

tighnamara said:

Countdown said:

Isn't that basically what Employees do?

No, because as soon as a specific project is completed the headcount is reduced. Not so easy reducing the headcount if employed.

Could this not be achieved by employing people via Fixed Term Contracts?

I think this is the route that we will eventually end up going down.
Fixed Term Contracts for less skilled roles and fully Inside IR35.

Statement Of Work Contracts for skilled roles where the client is prepared to put more work into ensuring they get the right person/people in to do the work.

How this will work in the finance sector though I'm not sure. I think the big (and maybe small niche) consultancies will just go in and start mopping up this work with plenty of it farmed off overseas.

[Tim330]

anonymous said:

[redacted]

HMRC fines the NHS to gather more tax for crucial NHS services!

[FredClogs]

Tim330 said:

anonymous said:

[redacted]

HMRC fines the NHS to gather more tax for crucial NHS services!

Government 101 innit.

[hyphen]

anonymous said:

[redacted]

.

I imagine this is why the new CEST version is being released by HMRC, it should make things more clear.

[85Carrera]

deckster said:

With that attitude that I can't imagine why permies might not like you

As we've said many times; there are good permies and bad permies; good contractors and bad contractors. I have never found employment status to be particularly good indicator of quality.

Agreed, the post you’ve quoted is not particularly sensible

[wombleh]

I'll not be holding my breath!

[theboss]

Am I right in thinking that with the liability for employers NIC falling on the contractor, the marginal rate between £100-125k will be 40% + 20% (loss of allowance) + 2% NIC + 13.8% employers, or 75.8 pence in the pound deducted?

Or do they take the employers NIC portion first and then deem the remainder taxable income and apply the usual deductions?

I’m guessing there’s no provision for pension contributions being made before any of this - they would have to be paid from the net income with no NI saving to be had (as the employed can via salary sacrifice).

Would be interesting to understand exactly how deductions are calculated.

Edited by theboss on Friday 1st November 01:07

[worsy]

theboss said:

Am I right in thinking that with the liability for employers NIC falling on the contractor, the marginal rate between £100-125k will be 40% + 20% (loss of allowance) + 2% NIC + 13.8% employers, or 75.8 pence in the pound deducted?

Or do they take the employers NIC portion first and then deem the remainder taxable income and apply the usual deductions?

I’m guessing there’s no provision for pension contributions being made before any of this - they would have to be paid from the net income with no NI saving to be had (as the employed can via salary sacrifice).

Would be interesting to understand exactly how deductions are calculated.

Edited by theboss on Friday 1st November 01:07

Under the new rules, the rate quoted should be post employer NI. This may cause an issue where an existing contract spans the March/April period. however all advice seems to suggest leaving before the new rules kick in.

Why would you want to pay marginal rate at the rate you suggest, surely you'd simply take the time off rather than work for <25% of the headline rate.

Pension contributions can be made post Employer NI into your own fund or pre Employer NI into the Umbrella scheme. You may find that some employers have a preferred PAYE vehicle and therefore over a period of time you'll start to build up pension pots in several companies and would need to consolidate them,. Whether you feel this is worth the pre NI saving is your call.

[Countdown]

theboss said:

Am I right in thinking that with the liability for employers NIC falling n the contractor,

I’m fairly sure that’s not the case. If th Employer is treating the contract as being inside IR35 THEY pay the Ers NI.

[Mr Pointy]

Countdown said:

theboss said:

Am I right in thinking that with the liability for employers NIC falling n the contractor,

I’m fairly sure that’s not the case. If th Employer is treating the contract as being inside IR35 THEY pay the Ers NI.

Isn't the issue likley to be that the end user declares that the overall amount paid isn't going to rise so the fee payer has to take the Employers NI out of the fee, reducing the amount actually paid to the contractor? The liability might not lie with the contractor, but they end up paying it.

[theboss]

worsy said:

Under the new rules, the rate quoted should be post employer NI. This may cause an issue where an existing contract spans the March/April period. however all advice seems to suggest leaving before the new rules kick in.

Why would you want to pay marginal rate at the rate you suggest, surely you'd simply take the time off rather than work for <25% of the headline rate.

Pension contributions can be made post Employer NI into your own fund or pre Employer NI into the Umbrella scheme. You may find that some employers have a preferred PAYE vehicle and therefore over a period of time you'll start to build up pension pots in several companies and would need to consolidate them,. Whether you feel this is worth the pre NI saving is your call.

That’s very interesting, thanks for confirming.

I’ve just signed a contract until the end of 2020. The end client’s stance is currently unclear although I suspect they’ll adopt the general trend in FS. Of course the legislative situation for April is still unknown. I can only hope Boris and Javid feel like securing some contractor votes but I don’t have any confidence.

The employers NI issue would give some leverage for a rate rise at least.

I’d never take the money at such silly marginal rates, but feared it would be impossible to divert the surplus into a pension pre NI.

[Mr Pointy]

theboss said:

That’s very interesting, thanks for confirming.

I’ve just signed a contract until the end of 2020. The end client’s stance is currently unclear although I suspect they’ll adopt the general trend in FS.

The employers NI issue would give some leverage for a rate rise at least.

I’d never take the money at such silly marginal rates, but feared it would be impossible to divert the surplus into a pension pre NI.

Aren't you concerned that your position will be deemed inside IR35 in April & HMRC therefore decide to retrospectively charge you? If the position is inside in April 2020, it's difficult to defend that it was outside in October 2019, given nothing substantive changing.

[Gazzab]

If they take the position of the big banks then IR35 position will be different as you will move to an umbrella set up. You will then be paying for the umbrella (paying for hols, sick leave and pension) as well as being PAYE.
Regardless you need to be careful re having a contract that moves to inside IR35 and may want to consider leaving the contract in Feb 2020 (with last payment in March) otherwise hmrc might come back and question your pre April 2020 IR35 status ie still doing the same stuff and now inside suggests to hmrc that you were always inside.

[Countdown]

Mr Pointy said:

Countdown said:

theboss said:

Am I right in thinking that with the liability for employers NIC falling n the contractor,

I’m fairly sure that’s not the case. If th Employer is treating the contract as being inside IR35 THEY pay the Ers NI.

Isn't the issue likley to be that the end user declares that the overall amount paid isn't going to rise so the fee payer has to take the Employers NI out of the fee, reducing the amount actually paid to the contractor? The liability might not lie with the contractor, but they end up paying it.

Could be...that would be really harsh in my opinion...in principle no different to reducing an Employee's salary to cover Employer costs (such as NI, superann etc).

[CaptainSlow]

Does anyone know if you can pay into a ssip if going through a ltd company and inside ir35? And if so, can these be made as employer contributions via salary sacrifice to reduce employer ni?

Seems that going through an umbrella you're limited to their pension scheme.

[Tim330]

CaptainSlow said:

Does anyone know if you can pay into a ssip if going through a ltd company and inside ir35? And if so, can these be made as employer contributions via salary sacrifice to reduce employer ni?

Seems that going through an umbrella you're limited to their pension scheme.

At the moment yes you can pay into a SIPP before making the deemed payment calculation for inside ir35 contracts (you also get a generous 5% expense allowance which goes next year). From next April the fee payer will deduct the NICs and tax before paying the contractor so I don't think so. Only way to avoid the NI (which you can't get back via tax return) is to use the agents pension scheme.

[CaptainSlow]

Thanks, would there be a way to make the ltd company the fee payer so the ssip could still be used?

[theboss]

If it comes in and I stay where I am, then I’d try and argue for some exceptional status for 6 months as I’m instrumental to a project delivery with no prospect of extension after completion late next year, I’m totally detached from BAU and work remotely and autonomously. If that fails I’d have to weigh up staying “inside” vs securing a contract which is outside. The WFH is a big attraction so it would have to be something fairly compelling.

In terms of retrospective determination - not worried in the slightest. I’ve just lost my shirt in a divorce so HMRC would be doing me a favour bankrupting me as I have absolutely nothing to offer them.

[Mr Pointy]

CaptainSlow said:

Thanks, would there be a way to make the ltd company the fee payer so the ssip could still be used?

After April the term fee payer has the specific definition of being the last entity in the chain before the PSC, ie the one that actually pays the PSC. This may well not be the end client of course.