Contractors: IR35 & general discussion
Discussion
CT is one thing, I'm talking about his proposed hike on dividends tax rates to bring them in line with income tax rates
ie
Basic 7.5% rate > 20%
Higher 32.5% > 40%
Additional 38% > whatever it is he's planning on increasing the additional rate to
That's quite an impact when added on to the additional CT
ie
Basic 7.5% rate > 20%
Higher 32.5% > 40%
Additional 38% > whatever it is he's planning on increasing the additional rate to
That's quite an impact when added on to the additional CT
Gazzab said:
I have read up and don’t believe contractors were forced into using them.
https://www.tax.org.uk/media-centre/blog/technical...
I don’t disagree re the scary 20 year retrospective but I am not sure this creates a precedent. These are loans that remain unpaid.
Contractors involved don't have to pay penny to HMRC. They can repay the loans instead. https://www.tax.org.uk/media-centre/blog/technical...
I don’t disagree re the scary 20 year retrospective but I am not sure this creates a precedent. These are loans that remain unpaid.
Gazzab said:
The scale of the £s are scary though. I guess it could go something like this:
Day rate £700. 220 days a year. Say for 10 years.
Will have paid 10% (?) fee to the off shore scheme provider. Approx £15k a year ie £150k over 10 years. That’s ‘gone’.
Avoided (?) tax equal to approx 35% (?) of total invoiced ie £54k pa or £540k over ten years.
Then there is interest to add?
How does anyone manage to repay such huge sums!?
By not spending the money saved. You would have to be pretty stupid to think that it was anything other than dodgy! Day rate £700. 220 days a year. Say for 10 years.
Will have paid 10% (?) fee to the off shore scheme provider. Approx £15k a year ie £150k over 10 years. That’s ‘gone’.
Avoided (?) tax equal to approx 35% (?) of total invoiced ie £54k pa or £540k over ten years.
Then there is interest to add?
How does anyone manage to repay such huge sums!?
Using your figures they will have taken home £135k cash every year, so 1.3m. You would hope some of that went into appreciating assets like property, so possibly worth a great deal more.
wormus said:
I can’t believe that anyone would be so stupid so as to use one of these schemes. The ‘greed button’ is too easily pressed with some people but anyone who chooses to use these is asking for trouble, big trouble. The big bank I’m working for has just fallen in line with others... blanket “inside” or PAYE engagements only from end of Feb (to ensure +30 day payments caught by April).
I wonder how many would reverse this stance if the incoming government decided not to ratify the reform in time for the next tax year...
I wonder how many would reverse this stance if the incoming government decided not to ratify the reform in time for the next tax year...
theboss said:
The big bank I’m working for has just fallen in line with others... blanket “inside” or PAYE engagements only from end of Feb (to ensure +30 day payments caught by April).
I wonder how many would reverse this stance if the incoming government decided not to ratify the reform in time for the next tax year...
I thought the big banks were saying no to psc contractors ie perm or umbrella paye. Blanket inside’ assessments are illegal. I wonder how many would reverse this stance if the incoming government decided not to ratify the reform in time for the next tax year...
Gazzab said:
I thought the big banks were saying no to psc contractors ie perm or umbrella paye. Blanket inside’ assessments are illegal.
It will be umbrella PAYE by the look of it, effectively the same as being deemed inside. I don’t see them offering perm. I’ll know more soon - it hasn’t been formally communicated yet.worsy said:
Been offered a decent salary to go perm (not current gig) which I've decided to take. Based from home with expensed travel, and as I live in the sticks this would be a huge financial hit in an inside IR35 role.
Oh well, this has gone south. Contract states I'm based in office 70 miles away, despite protestations that I'll still claim expenses from home, they could (and should) be taxable. It also means they might suddenly say deduct the 70*0.45*2 (£63) from your daily client expenses as that is normal commute.Might as well take my chances in a post April world. Pissed that I gave notice on my contract though - ho hum
theboss said:
Gazzab said:
I thought the big banks were saying no to psc contractors ie perm or umbrella paye. Blanket inside’ assessments are illegal.
It will be umbrella PAYE by the look of it, effectively the same as being deemed inside. I don’t see them offering perm. I’ll know more soon - it hasn’t been formally communicated yet.Shaoxter said:
theboss said:
Gazzab said:
I thought the big banks were saying no to psc contractors ie perm or umbrella paye. Blanket inside’ assessments are illegal.
It will be umbrella PAYE by the look of it, effectively the same as being deemed inside. I don’t see them offering perm. I’ll know more soon - it hasn’t been formally communicated yet.Luckily I have enough outside IR35 consulting work with other clients to just quit the long term / big company gig. I’d far rather work 8 days a month on a good rate far outside IR35 than be a full time slave in the 60%+ marginal bracket. It’s a lose / lose situation for everyone but at least I’d get a better work life balance.
Edited by theboss on Friday 22 November 10:20
It is the end of contracting under a limited company.
This is just another Tory policy that penalises freelancers and genuine contractors. Go after the little fish, not big tech that pay no tax and reap profits in this country. The Tory party stopped being an advocate of business since Brexit broke out. "f
k business" as Boris says.
This is just another Tory policy that penalises freelancers and genuine contractors. Go after the little fish, not big tech that pay no tax and reap profits in this country. The Tory party stopped being an advocate of business since Brexit broke out. "f
k business" as Boris says.theboss said:
I suppose it depends what contract you sign with the umbrella company. Either way the net effect is the same.
Luckily I have enough outside IR35 consulting work with other clients to just quit the long term / big company gig. I’d far rather work 8 days a month on a good rate far outside IR35 than be a full time slave in the 60%+ marginal bracket. It’s a lose / lose situation for everyone but at least I’d get a better work life balance.
I might be being dumb but how does the umbrella contract have any IR35 relevance? As I understand it you won’t have an IR35 assessment, you won’t have a limited company, you will be paye with the umbrella, you will pay a % to the umbrella, you may have to ‘buy’ benefits (eg pension and holiday) and you may have a retrospective review by hmrc into your outside IR35 time with the client (hmrc have made a hollow promise on this). Luckily I have enough outside IR35 consulting work with other clients to just quit the long term / big company gig. I’d far rather work 8 days a month on a good rate far outside IR35 than be a full time slave in the 60%+ marginal bracket. It’s a lose / lose situation for everyone but at least I’d get a better work life balance.
Edited by theboss on Friday 22 November 10:20
silent ninja said:
It is the end of contracting under a limited company.
This is just another Tory policy that penalises freelancers and genuine contractors. Go after the little fish, not big tech that pay no tax and reap profits in this country. The Tory party stopped being an advocate of business since Brexit broke out. "fk business" as Boris says.
And it will only serve to reduce hmrc tax revenue ie :This is just another Tory policy that penalises freelancers and genuine contractors. Go after the little fish, not big tech that pay no tax and reap profits in this country. The Tory party stopped being an advocate of business since Brexit broke out. "f
k business" as Boris says.- lower rates
- less roles
- off shoring
- more consultancies cashing in.
- perm conversions.
Gazzab said:
Blanket inside’ assessments are illegal.
They’re not illegal, you just need to demonstrate “reasonable care” is taken. For example where a typical role or roles are subject to control and direction, because for example they are working in a team instead of providing a service, anyone doing that role can be considered inside IR35. Most large businesses have neither the time, manpower or appetite to do anything beyond that.
Gazzab said:
And it will only serve to reduce hmrc tax revenue ie :
- lower rates
- less roles
- off shoring
- more consultancies cashing in.
- perm conversions.
Not to mention decimating the whole side industry that has built up around contractors over the years. - lower rates
- less roles
- off shoring
- more consultancies cashing in.
- perm conversions.
Contractor Accountants, there are at least half a dozen I know off the top of my head who employ hundreds of people to look after contractors - gone.
Contractor Mortgage and financial advisers, the last firm I used had contractor in their company name - gone
Contractor Insurance firms - gone
Also the money I currently earn doesn't go under my mattress, it goes straight back into the economy but I'm already making plans to massively tighten my belt and spend a lot less. Times that by thousands of contractors.
Add it all together and the net effect will be less tax revenue but no one cares as long as those sneaky tax dodging contractors get their comeuppance.
Guvernator said:
Not to mention decimating the whole side industry that has built up around contractors over the years.
Contractor Accountants, there are at least half a dozen I know off the top of my head who employ hundreds of people to look after contractors - gone.
Contractor Mortgage and financial advisers, the last firm I used had contractor in their company name - gone
Contractor Insurance firms - gone
Also the money I currently earn doesn't go under my mattress, it goes straight back into the economy but I'm already making plans to massively tighten my belt and spend a lot less. Times that by thousands of contractors.
Add it all together and the net effect will be less tax revenue but no one cares as long as those sneaky tax dodging contractors get their comeuppance.
As has been stated several times, this is simply not true. Just because the money is not spent on you, does not mean that it isn’t spent and HMRC gets to collect revenue through many different means. PAYE, NI, CT, CGT, the list is endless.Contractor Accountants, there are at least half a dozen I know off the top of my head who employ hundreds of people to look after contractors - gone.
Contractor Mortgage and financial advisers, the last firm I used had contractor in their company name - gone
Contractor Insurance firms - gone
Also the money I currently earn doesn't go under my mattress, it goes straight back into the economy but I'm already making plans to massively tighten my belt and spend a lot less. Times that by thousands of contractors.
Add it all together and the net effect will be less tax revenue but no one cares as long as those sneaky tax dodging contractors get their comeuppance.
wormus said:
Gazzab said:
Blanket inside’ assessments are illegal.
They’re not illegal, you just need to demonstrate “reasonable care” is taken. For example where a typical role or roles are subject to control and direction, because for example they are working in a team instead of providing a service, anyone doing that role can be considered inside IR35. Most large businesses have neither the time, manpower or appetite to do anything beyond that.
https://www.contractorcalculator.co.uk/role_based_...
wormus said:
Gazzab said:
Blanket inside’ assessments are illegal.
They’re not illegal, you just need to demonstrate “reasonable care” is taken. For example where a typical role or roles are subject to control and direction, because for example they are working in a team instead of providing a service, anyone doing that role can be considered inside IR35. Most large businesses have neither the time, manpower or appetite to do anything beyond that.
Businesses with people who actually understand the ramifications for getting the decisions wrong are very much performing individual assessments.
bigandclever said:
wormus said:
Gazzab said:
Blanket inside’ assessments are illegal.
They’re not illegal, you just need to demonstrate “reasonable care” is taken. For example where a typical role or roles are subject to control and direction, because for example they are working in a team instead of providing a service, anyone doing that role can be considered inside IR35. Most large businesses have neither the time, manpower or appetite to do anything beyond that.
Businesses with people who actually understand the ramifications for getting the decisions wrong are very much performing individual assessments.
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