Contractors: IR35 & general discussion
Discussion
Quote from here...
Energy Website said:
For the former PSC worker (contractor) it is a pretty bleak picture. They will not enjoy the status of an employee and all the protections and benefits which that brings, far from it.
Instead the former PSC worker will remain exposed and vulnerable, subject to termination at the drop of a hat, no redundancy, no notice, no ability to challenge unfair treatment.
They will continue to pay for their training, their travel and any other expense incurred, and they will pay an additional 13.8% of their earnings on top of PAYE tax and employee NI deductions for the privilege.
That is, they will pay an additional 13.8% on top of the deductions normally taken from an employee who enjoys the protections and benefits that being an employee brings.
Conservatives - levelling up and making tax fair. Instead the former PSC worker will remain exposed and vulnerable, subject to termination at the drop of a hat, no redundancy, no notice, no ability to challenge unfair treatment.
They will continue to pay for their training, their travel and any other expense incurred, and they will pay an additional 13.8% of their earnings on top of PAYE tax and employee NI deductions for the privilege.
That is, they will pay an additional 13.8% on top of the deductions normally taken from an employee who enjoys the protections and benefits that being an employee brings.
Tim330 said:
Only thing I can think of is the 40k pa limit on tax relief on pension contributions. Depends on your rate if this will have an impact on your plan.
Edit-I guess you still save the Employer NIC even if above 40k allowance, hopefully an expert knows the answer to this.
yes its £40k pa - but you can carry forward previous 3 years so if youve put bugger all in last 3 years you can max £160k into a pension tax and NI free. Edit-I guess you still save the Employer NIC even if above 40k allowance, hopefully an expert knows the answer to this.
The reason you have to sacrifice all the way down to minimum wage is NI (employer and employee) is 25% from £8k to £50k (all approx)
aeropilot said:
See, this is the problem when I see posts like this as in my industry we're dealing with contractors that are only getting 200-250 as a day rate......and facing losing 20-25% of that.......by being inside.
Our clients are pushing back even a 30 per day rate increase.
Its the 1000's of contractors in many industries on 20-25/hr rates that are being seriously screwed over by this joyful HMRC wheeze.
Very true. For every contractor earning good money it seems there are a handful in engineering/IT/construction/HGV-driving earning far more modest amounts.Our clients are pushing back even a 30 per day rate increase.
Its the 1000's of contractors in many industries on 20-25/hr rates that are being seriously screwed over by this joyful HMRC wheeze.
Professionals earning as little as say £200 per day inside IR35, or via an Umbrella, ought to fight tooth and nail for at least 15%+ rise. If none is forethcoming then most are probably better jacking it in for a permanent job.
Finally, it's quite frankly disgraceful that low paid contractors are being lumped with paying their employers NI.
Lord Marylebone said:
To be honest, it’s those people who ruined it for everyone.
I know a few people who work in the IT and the nuclear industry who have been doing the same job for 10-15 years, at the same desk, Monday to Friday, with the same company, yet apparently they are a limited company ‘contracting to that business’.
They were normal employees who said to their employer “Do you mind if I make myself a ltd company for the same monthly cost and I’ll just carry on working here?”
It’s an absolute piss take.
I’m in a few big WhatsApp chat groups where some of them are talking about it and saying “oh well, got away with it for 14 years at least, now I’ll just go back permanent”
They were employees, no two ways about it.
Their terrific plan to pay less tax has now resulted in people like me, who genuinely do work short term projects for multiple varied clients at once, and have no idea where their jobs next month are coming from, potentially suffer.
It was absolutely no surprise that this couldn’t carry on.
The nuclear and pharma industries in the NW and N at least have been full of contractors being caught over the last few years - going back to the early 2000s I think. I know a few people who work in the IT and the nuclear industry who have been doing the same job for 10-15 years, at the same desk, Monday to Friday, with the same company, yet apparently they are a limited company ‘contracting to that business’.
They were normal employees who said to their employer “Do you mind if I make myself a ltd company for the same monthly cost and I’ll just carry on working here?”
It’s an absolute piss take.
I’m in a few big WhatsApp chat groups where some of them are talking about it and saying “oh well, got away with it for 14 years at least, now I’ll just go back permanent”
They were employees, no two ways about it.
Their terrific plan to pay less tax has now resulted in people like me, who genuinely do work short term projects for multiple varied clients at once, and have no idea where their jobs next month are coming from, potentially suffer.
It was absolutely no surprise that this couldn’t carry on.
Edited by Lord Marylebone on Sunday 23 February 11:04
Highest I've heard is £60k against a guy whom was a Sellafield contractor, but got it dropped to £6k when he dropped in it his "desk-mates". Then HMRC basically went round the desks of Sellafield (The Bad Nuclear Fuel Co as it was) and also the Good Sound Kind pharma company. Happening now at the new Sellafield Limited, but as you say that is because people flew the same desks as contractors as they did as staffies, yet the government that pays these people through the nuclear decommissioning fund is the same one that taxes them and has only just switched on that the PAYE / LTD balance has gone too far the wrong way.
To be fair though, the only peeps that I have heard stung are the ones that claim every last penny and take the mick e.g. commuting 6 miles across town at government milage rates but actually they took the bus. Like those highly skilled nuclear and pharmaceutical professionals that only have salaries of £11,499 and pay their high inexperienced and incompetent wives £11,499 as company secretary (who holds half the shares in the business and her Mum holds the other half nor dividend purposes).
Glad I got out of that Brookson contracting model in 1998!
aeropilot said:
wombleh said:
aeropilot said:
The problem is in some industries, 2 years is too short.
In mine, 5+ years for site based project duration isn't uncommon, and so project knowledge, especially at the end when trying to provide handover documentation and as-built information is very important to the ultimate end client.
This is the problem with a one-size fits all Govt mentality to such a wide variety of industries and situations.
I was on one project that ran about 15 years in energy sector, run by contractors. In mine, 5+ years for site based project duration isn't uncommon, and so project knowledge, especially at the end when trying to provide handover documentation and as-built information is very important to the ultimate end client.
This is the problem with a one-size fits all Govt mentality to such a wide variety of industries and situations.
I personally think the company should just create a permanent project team for that sort of setup. They could give the staff a payoff at the end or bench them for a few months while they find something else to use them on.
The problem is specialist experience, as permie's simply don't want to spend that amount of time on a project to gain such experience, as by default they want to move around to climb the career ladder, or the high level management decide to move someone to do something else.
The problem with permie staff is company politics and HR departments. The ones that are good and/or suck up to the right people don't hang around long enough to be of long term use (or go contract
) which just leaves the dregs......I worked on a project in 2016 that was still going from when I was on on 1995 - 1998. I was sick to the teeth to be back on it. I did my best to get the bit done I was responsible for done and told the client I'd do it in three months no matter who I upset and it got done. There were contractors asking the Client for extra endless rounds of reviews which I kept getting cancelled. Though I did get raillroaded once, into a meeting of 46 people, 3 whom were staff like me, which lasted three hours (so around 150 people hours, at a nett salary of £30ph that meeting cost £4,500 taxpayer money to say "yep we need to buy what we set this meeting up to say we need to buy.......)
Some stats from a survey, my reading on this is at best ~45% would stick around if moved inside. Could be as low as 12%.
https://www.linkedin.com/posts/offpayroll_ir35-act...
Probably a bit of an echo chamber effect, but that’s pretty dramatic even if you included a huge pinch of salt.
https://www.linkedin.com/posts/offpayroll_ir35-act...
Probably a bit of an echo chamber effect, but that’s pretty dramatic even if you included a huge pinch of salt.
Lord Marylebone said:
hyphen said:
So potentially a few positive changes.
IR35 change was never going to get cancelled- we cant have disguised employee, contractors at same client for many years! Anyone thinking it can be stopped is dreaming.
To be honest, it’s those people who ruined it for everyone.IR35 change was never going to get cancelled- we cant have disguised employee, contractors at same client for many years! Anyone thinking it can be stopped is dreaming.
I know a few people who work in the IT and the nuclear industry who have been doing the same job for 10-15 years, at the same desk, Monday to Friday, with the same company, yet apparently they are a limited company ‘contracting to that business’.
They were normal employees who said to their employer “Do you mind if I make myself a ltd company for the same monthly cost and I’ll just carry on working here?”
It’s an absolute piss take.
I’m in a few big WhatsApp chat groups where some of them are talking about it and saying “oh well, got away with it for 14 years at least, now I’ll just go back permanent”
They were employees, no two ways about it.
Their terrific plan to pay less tax has now resulted in people like me, who genuinely do work short term projects for multiple varied clients at once, and have no idea where their jobs next month are coming from, potentially suffer.
It was absolutely no surprise that this couldn’t carry on.
Edited by Lord Marylebone on Sunday 23 February 11:04
So you are as much of a tax massager as those disguised employees quite frankly.
Last day after 8 months on current gig outside of IR35... Taking a month off and then should be starting another gig with a client ive workked for in the past, but this time inside. Rate has been increased by about 20%.
Its going to be a different way of looking at things now though. Need to build up a personal war chest, and work out how to extract my LTD's war chest in the most efficient way, I'm assuming through a big ol pension contribution....
Have been recommended a few approved Umbrella's by client, (Orange Genie, Brookson, Advance Contracting, Liberty Bishop), so trying to get details on their fee's and benefits. Used Brookson when I first started contracting, and to be honest wasnt that impressed with their communications... Any views on the other Umbrella's/
Its going to be a different way of looking at things now though. Need to build up a personal war chest, and work out how to extract my LTD's war chest in the most efficient way, I'm assuming through a big ol pension contribution....
Have been recommended a few approved Umbrella's by client, (Orange Genie, Brookson, Advance Contracting, Liberty Bishop), so trying to get details on their fee's and benefits. Used Brookson when I first started contracting, and to be honest wasnt that impressed with their communications... Any views on the other Umbrella's/
I'm a permie Sr DevOps Engineer - I've always worked almost solely with contractors and always imagined it'd be my end goal and I guess it still could be.
I haven't tried my hand at it yet as previously I didn't think I had enough experience, I think I do now, but I have been saving for a mortgage deposit and in the interim. I've done that now, moved in 5 months ago... So I have no blockers anymore, until the whole IR35 thing became such a s
tstorm.
I must admit, I haven't read the entirety of this thread but I have glossed over a few pages over the past few months as I'd like to dip my toes in the water but in the current climate, it seems like the wrong time for a new comer.
What do you guys think is going to happen with IR35 in the next 6-12 months? Will HMRC give in? Will companies stop the throwing their blankets?
Or, does it even matter?
I haven't tried my hand at it yet as previously I didn't think I had enough experience, I think I do now, but I have been saving for a mortgage deposit and in the interim. I've done that now, moved in 5 months ago... So I have no blockers anymore, until the whole IR35 thing became such a s
tstorm.I must admit, I haven't read the entirety of this thread but I have glossed over a few pages over the past few months as I'd like to dip my toes in the water but in the current climate, it seems like the wrong time for a new comer.
What do you guys think is going to happen with IR35 in the next 6-12 months? Will HMRC give in? Will companies stop the throwing their blankets?
Or, does it even matter?
If you are in a perm role and the pay is good enough then moving to a contract is unlikely to be financially that much better any more. The medium to long term market forecast is total guess work. It might improve and make it work the risk.
All you do know is that most roles are now inside, rates are generally down, contractors are often effectively paying employers ni, there are no expenses from gross, down time between contracts has never been worse etc etc. If you were paid £500 inside IR35 and worked 220 days then you will likely be better off but if that dropped to 110 days then you might be worse off. Run some maths and work it through?
All you do know is that most roles are now inside, rates are generally down, contractors are often effectively paying employers ni, there are no expenses from gross, down time between contracts has never been worse etc etc. If you were paid £500 inside IR35 and worked 220 days then you will likely be better off but if that dropped to 110 days then you might be worse off. Run some maths and work it through?
hyphen said:
Is it inside as the working practices will be inside? Or because client wants everything inside
The client has placed a blanket coverage of all contractors to be inside IR35.When I contracted with them last year the contract was offered as outside and my Ltd Company signed up to that.
Clockwork Cupcake said:
Bluedot said:
If you're in a perm role then sit tight is the best thing I reckon, see how things pan out.
I agree. This is not the time to be going contracting. I actually put off a permie guy who I had worked with at a previous client from going contract last year because of what was happening, as none of the agents he was dealing with even mentioned it as they just wanted to place him in a contract. He's been permie all 35 years of his working life, for only 2 firms, and I said stay put, don't even think of it.
Now he's just starting to learn about whats happening (as no contract staff where he works) he's so glad he did stay put.
95JO said:
I'm a permie Sr DevOps Engineer - I've always worked almost solely with contractors and always imagined it'd be my end goal and I guess it still could be.
I haven't tried my hand at it yet as previously I didn't think I had enough experience, I think I do now, but I have been saving for a mortgage deposit and in the interim. I've done that now, moved in 5 months ago... So I have no blockers anymore, until the whole IR35 thing became such a ststorm.
I must admit, I haven't read the entirety of this thread but I have glossed over a few pages over the past few months as I'd like to dip my toes in the water but in the current climate, it seems like the wrong time for a new comer.
What do you guys think is going to happen with IR35 in the next 6-12 months? Will HMRC give in? Will companies stop the throwing their blankets?
Or, does it even matter?
Why do you want to be a contractor?I haven't tried my hand at it yet as previously I didn't think I had enough experience, I think I do now, but I have been saving for a mortgage deposit and in the interim. I've done that now, moved in 5 months ago... So I have no blockers anymore, until the whole IR35 thing became such a s
tstorm.I must admit, I haven't read the entirety of this thread but I have glossed over a few pages over the past few months as I'd like to dip my toes in the water but in the current climate, it seems like the wrong time for a new comer.
What do you guys think is going to happen with IR35 in the next 6-12 months? Will HMRC give in? Will companies stop the throwing their blankets?
Or, does it even matter?
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