Contractors: IR35 & general discussion
Discussion
HMRC are spineless bureaucrats. Do you see them chasing Amazon and Google for taxes? Or the billionaires that offshore wealth made in the UK and pay millions for creative accountants? Nope.
Instead, they go after the little guys. Easy pickings. There isn't a union for contractors.
Have you seen the rate of tax these rich people pay? It's single digits at best. The richer you get, the less tax you pay.
This is all about politics and control of normal folks. Without getting all ideological, it's enslavement - pushing you in to a corner to play by a certain set of rigid rules, pay your taxes until your dead and even then pay more tax than the elite. These rules don't apply to the elite.
And you wonder why there is a wealth gap.
Instead, they go after the little guys. Easy pickings. There isn't a union for contractors.
Have you seen the rate of tax these rich people pay? It's single digits at best. The richer you get, the less tax you pay.
This is all about politics and control of normal folks. Without getting all ideological, it's enslavement - pushing you in to a corner to play by a certain set of rigid rules, pay your taxes until your dead and even then pay more tax than the elite. These rules don't apply to the elite.
And you wonder why there is a wealth gap.
The other way of looking it is the “elite”/large companies pay a lot of tax and create a lot of jobs. You go after them and they are able to up sticks and move. One of the reasons Ireland has so many tech companies is the favourable tax and grants they were offering.
On the other hand one man band contractors doing the same job as an employee at the next desk but paying only half the tax is rightly who HMRC are going after. They only benefit themselves and and exercising their right to a lifestyle they enjoy. If they really are so valuable to their clients, it’ll be reflected by the market and rates will increase for those inside IR35.
On the other hand one man band contractors doing the same job as an employee at the next desk but paying only half the tax is rightly who HMRC are going after. They only benefit themselves and and exercising their right to a lifestyle they enjoy. If they really are so valuable to their clients, it’ll be reflected by the market and rates will increase for those inside IR35.
Sounds like some permie bitterness coming out there but ultimately your large corp sympathising doesn't alter the fact that they pay crap wages and do everyone out of tax.
Contractors have alread been hit with dividend tax, which more than makes up for the job insecurity etc. This is just taking the piss on a whole new level.
It's like being a private landlord. The changes are fine if you've a business portfolio of 100's but not for the one man band. Government is set up to bolster the already rich and drain the rest.
Contractors have alread been hit with dividend tax, which more than makes up for the job insecurity etc. This is just taking the piss on a whole new level.
It's like being a private landlord. The changes are fine if you've a business portfolio of 100's but not for the one man band. Government is set up to bolster the already rich and drain the rest.
SOL111 said:
Sounds like some permie bitterness coming out there but ultimately your large corp sympathising doesn't alter the fact that they pay crap wages and do everyone out of tax.
Contractors have alread been hit with dividend tax, which more than makes up for the job insecurity etc. This is just taking the piss on a whole new level.
It's like being a private landlord. The changes are fine if you've a business portfolio of 100's but not for the one man band. Government is set up to bolster the already rich and drain the rest.
Sounds like some contractor bleating about unfairness there. I don’t feel bad for you I’m afraid if you find yourself within IR35, about time you paid your way. If you are on the outside good luck to you. Somebody has to pay for the public services you and your family enjoy. Contractors have alread been hit with dividend tax, which more than makes up for the job insecurity etc. This is just taking the piss on a whole new level.
It's like being a private landlord. The changes are fine if you've a business portfolio of 100's but not for the one man band. Government is set up to bolster the already rich and drain the rest.
Corporate permie jobs do pay very well thanks if you operate at the right level. It just takes a little effort and intellect.
Edited by anonymous-user on Friday 19th July 08:11
wormus said:
SOL111 said:
Sounds like some permie bitterness coming out there but ultimately your large corp sympathising doesn't alter the fact that they pay crap wages and do everyone out of tax.
Contractors have alread been hit with dividend tax, which more than makes up for the job insecurity etc. This is just taking the piss on a whole new level.
It's like being a private landlord. The changes are fine if you've a business portfolio of 100's but not for the one man band. Government is set up to bolster the already rich and drain the rest.
Sounds like some contractor bleating about unfairness there. I don’t feel bad for you I’m afraid if you find yourself within IR35, about time you paid your way. If you are on the outside good luck to you. Somebody has to pay for the public services you and your family enjoy. Contractors have alread been hit with dividend tax, which more than makes up for the job insecurity etc. This is just taking the piss on a whole new level.
It's like being a private landlord. The changes are fine if you've a business portfolio of 100's but not for the one man band. Government is set up to bolster the already rich and drain the rest.
Corporate permie jobs do pay very well thanks if you operate at the right level. It just takes a little effort and intellect.
Edited by wormus on Friday 19th July 08:11
In my industry (oil and gas engineering) the total tax paid by a contractor (amount not %) is higher than a staff person doing a similar role. Post April 2020 if I can't find outside ir35 roles I will be looking for a staff job as I'm not prepared to pay employers NI out of my day rate and not be able to contribute to my pension pre NI deductions. Other contractors may feel the same way so not sure how much extra tax revenue this change will bring in to HMRC.
GT03ROB said:
I do like a good contractor v. permie spat.....
I’ve got nothing against genuine freelance specialists or people running small companies, employing others, who are for the right reasons outside IR35. What I cannot stand is the hired help swinging their dicks about whilst moaning about unfair life is.
wormus said:
Corporate permie jobs do pay very well thanks if you operate at the right level. It just takes a little effort and intellect.
Corporate jobs pay well as most people who have any talent tend to quit and go it alone.Many 'right level' corporate jobs involve nothing more than the engagement of external providers.
Ignoring the contractors with a permie mentality types, the competition for corporate jobs will go up, and wages will go down if contracting ends.
A lot of contractors had much more senior positions and quit as money was the same with less hassle as a contractor (yes due to tax situation).
wormus said:
Sounds like some contractor bleating about unfairness there. I don’t feel bad for you I’m afraid if you find yourself within IR35, about time you paid your way. If you are on the outside good luck to you. Somebody has to pay for the public services you and your family enjoy.
Corporate permie jobs do pay very well thanks if you operate at the right level. It just takes a little effort and intellect.
Lol. Yes your idea of fairness is clearly balanced when you're sympathising about corporate tax Corporate permie jobs do pay very well thanks if you operate at the right level. It just takes a little effort and intellect.
Edited by wormus on Friday 19th July 08:11
Always been outside and will be outside (if you'd read any previous posts).
No dick swinging here but you do sound like you have a chip.
Tim330 said:
On the point of somebody has to pay for public services.
In my industry (oil and gas engineering) the total tax paid by a contractor (amount not %) is higher than a staff person doing a similar role. Post April 2020 if I can't find outside ir35 roles I will be looking for a staff job as I'm not prepared to pay employers NI out of my day rate and not be able to contribute to my pension pre NI deductions. Other contractors may feel the same way so not sure how much extra tax revenue this change will bring in to HMRC.
This is my take on it too - from my experience the absolute tax take for me as a contractor is similar if not greater than me as a permie. I can't see my industry stomaching the extra costs to cover the changes, so it's likely to be coming out of my pocket. The only choice will be whether I continue to contract in which case the government gets it, or whether I take permie work in which case no-one does.In my industry (oil and gas engineering) the total tax paid by a contractor (amount not %) is higher than a staff person doing a similar role. Post April 2020 if I can't find outside ir35 roles I will be looking for a staff job as I'm not prepared to pay employers NI out of my day rate and not be able to contribute to my pension pre NI deductions. Other contractors may feel the same way so not sure how much extra tax revenue this change will bring in to HMRC.
The change is terribly short sighted. From my observations in engineering, the availability of a flexible & skilled contract workforce is one aspect that sets us apart from our competition on the continent. Almost 100% of my contract work has been performed either abroad, or in the UK for a foreign buyer. I can see a lot of that drying up as these changes take effect.
wormus said:
I’ve got nothing against genuine freelance specialists or people running small companies, employing others, who are for the right reasons outside IR35.
What I cannot stand is the hired help swinging their dicks about whilst moaning about unfair life is.
You seem to have a perception that the only downside (upside?) is that some overpaid contract scum lose some income. The tax revenue argument seems to be optimistic at best as the calculations I've made for my work/industry suggest the benefit to tax take will be minor, as working practices will be forced to adapt to mitigate the extra costs.What I cannot stand is the hired help swinging their dicks about whilst moaning about unfair life is.
You seem to place no value on either the flexibility this brings to companies when resourcing cyclical and time limited projects, or for the inconveniences, costs and lack of benefits that a contractor deals with by working this way.
egomeister said:
You seem to have a perception that the only downside (upside?) is that some overpaid contract scum lose some income. The tax revenue argument seems to be optimistic at best as the calculations I've made for my work/industry suggest the benefit to tax take will be minor, as working practices will be forced to adapt to mitigate the extra costs.
You seem to place no value on either the flexibility this brings to companies when resourcing cyclical and time limited projects, or for the inconveniences, costs and lack of benefits that a contractor deals with by working this way.
It is very easy to hire people on short term contracts (or even zero-hour contracts). Any company struggling to do this needs to sack its HR Managers. I hire finance temps all the time, either on FTC or through an Agnecy where the temp is PAYE on the Agency’s books. You seem to place no value on either the flexibility this brings to companies when resourcing cyclical and time limited projects, or for the inconveniences, costs and lack of benefits that a contractor deals with by working this way.
In terms of “lack of benefits” - isn’t that mitigated by the higher hourly/daily rates?
Countdown said:
egomeister said:
You seem to have a perception that the only downside (upside?) is that some overpaid contract scum lose some income. The tax revenue argument seems to be optimistic at best as the calculations I've made for my work/industry suggest the benefit to tax take will be minor, as working practices will be forced to adapt to mitigate the extra costs.
You seem to place no value on either the flexibility this brings to companies when resourcing cyclical and time limited projects, or for the inconveniences, costs and lack of benefits that a contractor deals with by working this way.
It is very easy to hire people on short term contracts (or even zero-hour contracts). Any company struggling to do this needs to sack its HR Managers. I hire finance temps all the time, either on FTC or through an Agnecy where the temp is PAYE on the Agency’s books. You seem to place no value on either the flexibility this brings to companies when resourcing cyclical and time limited projects, or for the inconveniences, costs and lack of benefits that a contractor deals with by working this way.
In terms of “lack of benefits” - isn’t that mitigated by the higher hourly/daily rates?
I don't know the specific details of your industry, but I wouldn't say skilled and experienced workers were easy to find in mine. My main German customer struggles to find decent contract worker even with the current rules, let alone if the changes come to pass. Most of their contract staff are from the UK.
wormus said:
GT03ROB said:
I do like a good contractor v. permie spat.....
I’ve got nothing against genuine freelance specialists or people running small companies, employing others, who are for the right reasons outside IR35. What I cannot stand is the hired help swinging their dicks about whilst moaning about unfair life is.
….and I know exactly where you are coming from.
Another thing to add: I can see a continental style outsource consultancy agency model becoming more common in the UK. From speaking to people working that way in other countries, it's the worst of both worlds. You get paid like a permie, but with most of the downside and inconvenience of being a contractor. The agency charges a fat rate to the client and pockets all the money.
It will only serve to concentrate industry into the hands of fewer and fewer large players. My work as a contractor has provided me with a foundation in running a company and the seed capital that could be used to grow a business, when the right opportunity presents itself. Government seems only interested in large business, but forgets that every large business began as a small one - contracting massively derisks that transition from employed to employer.
It will only serve to concentrate industry into the hands of fewer and fewer large players. My work as a contractor has provided me with a foundation in running a company and the seed capital that could be used to grow a business, when the right opportunity presents itself. Government seems only interested in large business, but forgets that every large business began as a small one - contracting massively derisks that transition from employed to employer.
egomeister said:
Another thing to add: I can see a continental style outsource consultancy agency model becoming more common in the UK. From speaking to people working that way in other countries, it's the worst of both worlds. You get paid like a permie, but with most of the downside and inconvenience of being a contractor. The agency charges a fat rate to the client and pockets all the money.
It will only serve to concentrate industry into the hands of fewer and fewer large players. My work as a contractor has provided me with a foundation in running a company and the seed capital that could be used to grow a business, when the right opportunity presents itself. Government seems only interested in large business, but forgets that every large business began as a small one - contracting massively derisks that transition from employed to employer.
That already happened loads though. Tata Consultancy Services for example are becoming huge.It will only serve to concentrate industry into the hands of fewer and fewer large players. My work as a contractor has provided me with a foundation in running a company and the seed capital that could be used to grow a business, when the right opportunity presents itself. Government seems only interested in large business, but forgets that every large business began as a small one - contracting massively derisks that transition from employed to employer.
And with the foreign how's ones, only minimal jobs will be on shore.
egomeister said:
Of course the rates compensate, as does the tax position - I notice you didn't comment on the inconvenience and costs.
I thought I did - all recruitment is inconvenient and involves costs. It doesn't matter if it's temp/perm/contractegomeister said:
I don't know the specific details of your industry, but I wouldn't say skilled and experienced workers were easy to find in mine. My main German customer struggles to find decent contract worker even with the current rules, let alone if the changes come to pass. Most of their contract staff are from the UK.
Possibly I'm being over-simplistic but the new "rules" don't physically change the number of workers available to do a job - the rules just mean that tax has to be deducted at source. This means the "Contractor" has 3 options1. Accept that tax is paid earlier (based on the posts above this tax would have been paid anyway but possibly as CT or via self-assessment)
2. Take a permie role.
3. Insist on a higher day rate (because the role is specialist, essential, and the Employer wants the flexibility of a contractor compared to a permie on 1 week's notice).
As has been pointed out above - for people like SOL111 who are genuine contractors the rules won't make any difference.
Interesting to see everyone's views on this change.
When IR35 came in I looked very closely at the regulations and interpretations of what being inside IR35 was and wasn't and it was a distinctly grey area to assess on most contract roles, certainly any I'd ever done.
So based on the assumption that the worst that would happen would be losing a tribunal and having to pay the difference, I ignored it. Many of my peers at the time listened to their frightened accountants and signed up... for about 1 contract before reverting back.
All of my contracts have been on distinct projects with fixed timescales, scope, etc... so I'm not overly concenred with this change, however, if I WAS in effectively a BAU role I might be a bit more nervous.
So far, I've ignored any advert with the term 'inside IR35' included, as that type of role probably wouldn't be what I was looking for and I'd be expecting the rate to be less attractive.
The companies that don't box clever with these regs will attract less potential applicants. That may not be an issue for them if the market is quiet they'll probably still get plenty of applicants. But when the market picks up and they're actually needing 'good' people they may find it more restrictive.
When IR35 came in I looked very closely at the regulations and interpretations of what being inside IR35 was and wasn't and it was a distinctly grey area to assess on most contract roles, certainly any I'd ever done.
So based on the assumption that the worst that would happen would be losing a tribunal and having to pay the difference, I ignored it. Many of my peers at the time listened to their frightened accountants and signed up... for about 1 contract before reverting back.
All of my contracts have been on distinct projects with fixed timescales, scope, etc... so I'm not overly concenred with this change, however, if I WAS in effectively a BAU role I might be a bit more nervous.
So far, I've ignored any advert with the term 'inside IR35' included, as that type of role probably wouldn't be what I was looking for and I'd be expecting the rate to be less attractive.
The companies that don't box clever with these regs will attract less potential applicants. That may not be an issue for them if the market is quiet they'll probably still get plenty of applicants. But when the market picks up and they're actually needing 'good' people they may find it more restrictive.
Piersman2 said:
The companies that don't box clever with these regs will attract less potential applicants. That may not be an issue for them if the market is quiet they'll probably still get plenty of applicants. But when the market picks up and they're actually needing 'good' people they may find it more restrictive.
I don't disagree - but I also think it will increase the salaries of the permies. Because if IT employ somebody who Finance/HR think falls inside IR35, and IT offer a higher salary to compensate the Contractor, it's still a PITA for Finance to record them on the monthly FPS submissions to HMRC. In short IR35 makes it an administrative ballache employing Contractors who should be permies.
Countdown said:
egomeister said:
Of course the rates compensate, as does the tax position - I notice you didn't comment on the inconvenience and costs.
I thought I did - all recruitment is inconvenient and involves costs. It doesn't matter if it's temp/perm/contractCountdown said:
egomeister said:
I don't know the specific details of your industry, but I wouldn't say skilled and experienced workers were easy to find in mine. My main German customer struggles to find decent contract worker even with the current rules, let alone if the changes come to pass. Most of their contract staff are from the UK.
Possibly I'm being over-simplistic but the new "rules" don't physically change the number of workers available to do a job - the rules just mean that tax has to be deducted at source. This means the "Contractor" has 3 options1. Accept that tax is paid earlier (based on the posts above this tax would have been paid anyway but possibly as CT or via self-assessment)
2. Take a permie role.
3. Insist on a higher day rate (because the role is specialist, essential, and the Employer wants the flexibility of a contractor compared to a permie on 1 week's notice).
As has been pointed out above - for people like SOL111 who are genuine contractors the rules won't make any difference.
I'd like to believe that option 3 would come to pass, but I've seen little evidence that my industry can eat the extra costs. I know of companies that are already crapping themselves that they are going to be stuffed in April as they won't be able to get the resource they require at a cost they can justify.
Edited to add: Let me be clear, I have no time for permietractors who stay doing the same role for years on end to the point that no-one realises they are not employed. I also have contempt for companies that hire graduate & low experience limited company contractors (i'm looking at you JLR...). These scenarios are both clearly making a mockery of the disguised employment rules.
Edited by egomeister on Friday 19th July 10:30
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