The Mathew Taylor Report
Discussion
This looks like more bad news for us contractors...
http://www.itcontractor.com/higher-contractor-tax-...
Not so much the higher taxes but the general feeling that nobody in government recognises the benefits of a flexible workforce or the wishes of those like myself who do not want to be in employment for many different reasons.
It seems inevitable that the new public sector rules around IR35 will be enacted in the private sector in pretty short order.
http://www.itcontractor.com/higher-contractor-tax-...
Not so much the higher taxes but the general feeling that nobody in government recognises the benefits of a flexible workforce or the wishes of those like myself who do not want to be in employment for many different reasons.
It seems inevitable that the new public sector rules around IR35 will be enacted in the private sector in pretty short order.
My opinion - IR35 was a fairly clear flag that one man bands were perceived as exploiting a loophole. That was a while ago.
This is a very clear flag that HMRC don't see a flexible workforce that pays less tax as as useful a thing as you do
Surely there's mileage in two or three man bands where most of the upsides still apply, is much less likely than a one man band to come into IR35 or Dependent remits, and retains the small contract vibe? Could actually work to your advantage, in terms of ongoing upselling of work?
This is a very clear flag that HMRC don't see a flexible workforce that pays less tax as as useful a thing as you do
Surely there's mileage in two or three man bands where most of the upsides still apply, is much less likely than a one man band to come into IR35 or Dependent remits, and retains the small contract vibe? Could actually work to your advantage, in terms of ongoing upselling of work?
It's becoming frustrating...
Since I started contract work I've:
- paid more tax that I did as an employee (lower percentage on a higher income)
- become far less likely to require any support from the state (outside healthcare I don't see any reason I could need support in the next few years even if things went bad)
- addressed the needs of my customers to cover cyclical project based work without the need to hire people they don't have a ongoing need for
- exported my services abroad
- build the capital to grow a business beyond contracting when I identify the right opportunity
Yet it feels like someone working in this way is going to get increasingly squeezed in the near future. It's a real shame as these are the sort of qualities we should be encouraging in society rather than dissuading. I've not got the impression from the Conservatives in recent years that they are the friend of small business, which they should be.
edit: actually looking back at it, every single project I have worked on as a contractor has either been foreign based, for a UK company with a foreign end customer or for a UK company funded from abroad. Every penny I've earned, and every penny of tax paid on that has ultimately been brought in from abroad... surely I should get a tax break instead!
Since I started contract work I've:
- paid more tax that I did as an employee (lower percentage on a higher income)
- become far less likely to require any support from the state (outside healthcare I don't see any reason I could need support in the next few years even if things went bad)
- addressed the needs of my customers to cover cyclical project based work without the need to hire people they don't have a ongoing need for
- exported my services abroad
- build the capital to grow a business beyond contracting when I identify the right opportunity
Yet it feels like someone working in this way is going to get increasingly squeezed in the near future. It's a real shame as these are the sort of qualities we should be encouraging in society rather than dissuading. I've not got the impression from the Conservatives in recent years that they are the friend of small business, which they should be.
edit: actually looking back at it, every single project I have worked on as a contractor has either been foreign based, for a UK company with a foreign end customer or for a UK company funded from abroad. Every penny I've earned, and every penny of tax paid on that has ultimately been brought in from abroad... surely I should get a tax break instead!
Edited by egomeister on Tuesday 11th July 13:47
The likes of Uber and Deliveroo have made the gig economy so much more visible than it was a few years ago. Contracting, specifically IT contracting, to some extent flew under the radar for years/decades because it is still a fairly niche occupation. IR35 obviously provided some deterrent, but I wonder if these new proposals of a “dependent contractor” will be the thing that really changes the landscape as most IT contractors only have one client and are completely reliant on that one client for the duration of the contract.
Bikerjon said:
The likes of Uber and Deliveroo have made the gig economy so much more visible than it was a few years ago. Contracting, specifically IT contracting, to some extent flew under the radar for years/decades because it is still a fairly niche occupation. IR35 obviously provided some deterrent, but I wonder if these new proposals of a “dependent contractor” will be the thing that really changes the landscape as most IT contractors only have one client and are completely reliant on that one client for the duration of the contract.
This is certainly true but, it's usually mandated by the clients.For about 6 months last year I was splitting my time between two clients but one of them then decided not to renew unless they could have me full time as it wasn't really working for them.
I don't see much difference between the 'gig economy' and 'self-employment'. You don't know where the next job is coming from and you get no benefits. No work, no dosh.
If you want to be paid when you're ill, paid when you're on holiday, paid when you're having a baby - then you need to be Employed. And then someone else, quite rightly, makes the rules.
If you want to be paid when you're ill, paid when you're on holiday, paid when you're having a baby - then you need to be Employed. And then someone else, quite rightly, makes the rules.
Simpo Two said:
I don't see much difference between the 'gig economy' and 'self-employment'. You don't know where the next job is coming from and you get no benefits. No work, no dosh.
If you want to be paid when you're ill, paid when you're on holiday, paid when you're having a baby - then you need to be Employed. And then someone else, quite rightly, makes the rules.
Exactly this, the issue with gig economy/self-employment (and also zero hours contracts) comes when companies abuse the arrangement in a very one sided manner. For the gig scenario this is putting stipulations in place that would be typical of an employee whilst falling back on the flexibility of using self employed labour. For zero hours it's not that different, locked down terms but no guarantee of income.If you want to be paid when you're ill, paid when you're on holiday, paid when you're having a baby - then you need to be Employed. And then someone else, quite rightly, makes the rules.
I think the existing work/employment structures aren't far off what we need, just with a little tweak to the application of them and ensuring that people are engaged in the correct way for the work they are doing.
skahigh said:
This looks like more bad news for us contractors...
http://www.itcontractor.com/higher-contractor-tax-...
Not so much the higher taxes but the general feeling that nobody in government recognises the benefits of a flexible workforce or the wishes of those like myself who do not want to be in employment for many different reasons.
It seems inevitable that the new public sector rules around IR35 will be enacted in the private sector in pretty short order.
Flexible labour is key to a successful economy. Any free marketeer understands that, including this government.http://www.itcontractor.com/higher-contractor-tax-...
Not so much the higher taxes but the general feeling that nobody in government recognises the benefits of a flexible workforce or the wishes of those like myself who do not want to be in employment for many different reasons.
It seems inevitable that the new public sector rules around IR35 will be enacted in the private sector in pretty short order.
An awful lot of professional services contracting was clearly primarily a tax efficient method of structuring what was de facto employment. Having been there and done it, I for one can't deny it.
Similarly a large number of gig economy workers are clearly unable to exercise the freedoms that a typical business is able to; e.g. they operate under contractual restrictions that stop then seeking other clients.
It strikes me as eminently sensible to try to create a category of worker that sits between a genuine independent one-man-band service provider and an employee. There are clearly lots of people whose work sits somewhere between the two currently available categories. If this new category can be structured so that they receive some of the protection afforded to full time employees and have their and their employer's tax positions also fairly reflect their intermediate status, then it levels the playing field for all actors in the labour market by removing one of its current distortions.
This article puts a slightly more positive spin on it.
Contractor Weekly
This particularly caught my eye:
I certainly feel self employed but, when enough people keep telling you you're not, you start to wonder. Which probably highlights the problem with the ambiguity in the current legislation.
Contractor Weekly
This particularly caught my eye:
article said:
He argued, that typically, skilled contractors do not face the same kind of issues which these ‘dependent contractors’ might.
“Professional freelancers and contractors typically command higher rates of pay, enjoy more control in the way they work and in the vast majority of cases, are genuinely self-employed. Interestingly, the review suggests a move away from personal service and towards control for determining what constitutes a ‘dependent contractor’. This is a move alluded to in much of the IR35 consultation over the past couple of years.”
This seems counter to the impression usually given by most observers, to the point that I've occasionally wondered about by own status despite the fact that I'm engaged on a b2b basis, can send a substitute (and have other contractor contacts I could potentially use for this purpose), work from home 90% of the time (I decide if I go in to the office), choose my own hours and days (without need to forewarn my client) and am not engaged in any other aspect of my clients business other than completing development work on the projects they assign to me.“Professional freelancers and contractors typically command higher rates of pay, enjoy more control in the way they work and in the vast majority of cases, are genuinely self-employed. Interestingly, the review suggests a move away from personal service and towards control for determining what constitutes a ‘dependent contractor’. This is a move alluded to in much of the IR35 consultation over the past couple of years.”
I certainly feel self employed but, when enough people keep telling you you're not, you start to wonder. Which probably highlights the problem with the ambiguity in the current legislation.
The report does actually seem more targeted towards the likes of Uber and Deliveroo type operations. The worry is that if any new legislation is brought in to "protect" those types of workforce then it could by default apply to other occupations as well.
In my opinion there just needs to be a tax status of "Freelancer" that sits fairly between self-employed and employee. Then there would be no more IR35 nonsense and people could just get on with things without the constant worry that they would fail some petty clause in a contract if investigated.
In my opinion there just needs to be a tax status of "Freelancer" that sits fairly between self-employed and employee. Then there would be no more IR35 nonsense and people could just get on with things without the constant worry that they would fail some petty clause in a contract if investigated.
ATG said:
It strikes me as eminently sensible to try to create a category of worker that sits between a genuine independent one-man-band service provider and an employee. There are clearly lots of people whose work sits somewhere between the two currently available categories. If this new category can be structured so that they receive some of the protection afforded to full time employees and have their and their employer's tax positions also fairly reflect their intermediate status, then it levels the playing field for all actors in the labour market by removing one of its current distortions.
You'll need a name for this newly-created utopia. Perhaps you could call it a Management Consultancy!
I've been contracting for the last ten years or so - Engineer in Oil & Gas - and have had a couple of sticky patches - not least the last 18 months!
It looks like I have just secured my next "gig" but this time it will be as staff on a fixed term contract, which is just fine with me!
In the time since my last project ended, I've looked a few times at some of the gig economy stuff, just to keep some money coming in, but in the end didn't bother because it didn't seem worth it!
Being a "self-employed" courier/delivery driver for Yodel, or any of the other courier firms, really does look like it would be exploitation - paid per item delivered, worked out so it would be minimum wage if it was all delivered in 8 hours. Ok if you get a nice route, but very likely you won't and it could well take 10-12 hours. Then you get penalised for anything you don't deliver and of course, you're providing the vehicle and fuel at your own cost.
Is it any wonder courier services are crap these days?
If the new legislation puts an end to this sort of thing, it won't be too bad, I think.
IIRC, when IR35 was first brought into being, it was in response to some concerning practices in the construction industry, or at least that was the excuse! It scared me away from contracting for a few years, but in the end, didn't make that much difference to the freelancers among us.
It looks like I have just secured my next "gig" but this time it will be as staff on a fixed term contract, which is just fine with me!
In the time since my last project ended, I've looked a few times at some of the gig economy stuff, just to keep some money coming in, but in the end didn't bother because it didn't seem worth it!
Being a "self-employed" courier/delivery driver for Yodel, or any of the other courier firms, really does look like it would be exploitation - paid per item delivered, worked out so it would be minimum wage if it was all delivered in 8 hours. Ok if you get a nice route, but very likely you won't and it could well take 10-12 hours. Then you get penalised for anything you don't deliver and of course, you're providing the vehicle and fuel at your own cost.
Is it any wonder courier services are crap these days?
If the new legislation puts an end to this sort of thing, it won't be too bad, I think.
IIRC, when IR35 was first brought into being, it was in response to some concerning practices in the construction industry, or at least that was the excuse! It scared me away from contracting for a few years, but in the end, didn't make that much difference to the freelancers among us.
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