Contractors: IR35 & general discussion

[Countdown]

Greenmantle said:

So to summarise you are saying that "Its the market that counts".
Heads of Finance can either ask for £700 per day outside IR35
or
£700 + additional tax + employer NI + employee NI inside IR35.

Yes I think I agree. I suppose the point i was making was that the Applicant shouldn't decide whether the role is outside or inside, the Employer decides. The applicant then decides what day rate he is willing to accept. They can add on 50% if they want to to cover any tax/Ni costs but at the end of the day the market decides what the rate for that role is.

Greenmantle said:

If yes then I agree with it. What I don't agree with is this automatic squeeze on the little guys like us.
Currently my line of business is seeing a perfect storm of reduced talent (Brexit, Covid etc). What I don't want to see are the big players telling the government to issue more green cards since there is a resource problem because there isn't.

If there is reduced talent then surely there IS a resource problem ?

[Countdown]

Gazzab said:

£700 a day is a terrible rate for a senior role. If it’s then inside and eNI discounted then it’s akin to £500 a day. If you work 6 months a year only then that’s a rubbish income v’s perm.

I've just punched the figures into an Umbrella calculator and it suggests that, at £700/day they'd be taking home £8k per month net. Times that by 6 and you've got £48k net. So roughly the person is on the equivalent of £70k gross for the full year plus he gets 6 months holiday if he cant find another contract. - I think that's reasonably good but YMMV

[Bathroom_Security]

Are any of the take home calculators accurate?

8 years of perm, mostly in project delivery, and I am a bit fed up of it (perm, not project delivery). I tend to move about a bit anyway usually when works dries up or if the work place has been a st show.

Rates are quite poor at the moment for my line of work, £450 a day at best which inside IR35 seems not very tempting if the calculators are anything to go by

[Greenmantle]

Countdown said:

If there is reduced talent then surely there IS a resource problem ?

Certainly not reduced talent but a reduced pool of UK people willing to work for less money. That is the market at work.
Compare that with the current situation facing daffodil farmers in this country.
Everyone including the bio welfare of the planet looses out.
We certainly should not be feeding the notion of cheaper and cheaper and big business should not be "loopholing" the situation by sourcing from abroad "daffodils or talent" just because they can as well as ignore the social injustices from abroad.

[aeropilot]

Bathroom_Security said:

Are any of the take home calculators accurate?

8 years of perm, mostly in project delivery, and I am a bit fed up of it (perm, not project delivery). I tend to move about a bit anyway usually when works dries up or if the work place has been a st show.

Rates are quite poor at the moment for my line of work, £450 a day at best which inside IR35 seems not very tempting if the calculators are anything to go by

In my industry, £250 a day INSIDE is the current norm.........which puts me back to 2004/5 levels of net pay.

I wonder how many of the aholes in HMRC would like it if they were told to take a pay cut back to what they were earning 15 odd years ago.

[Olivera]

aeropilot said:

In my industry, £250 a day INSIDE is the current norm.........which puts me back to 2004/5 levels of net pay.

I wonder how many of the aholes in HMRC would like it if they were told to take a pay cut back to what they were earning 15 odd years ago.

£250 per day is almost sub tradesperson money, never mind skilled engineer/automotive, which I'm guessing is your industry? It's a fked up market if your rates are being driven down to that level.

[kingston12]

Countdown said:

Gazzab said:

£700 a day is a terrible rate for a senior role. If it’s then inside and eNI discounted then it’s akin to £500 a day. If you work 6 months a year only then that’s a rubbish income v’s perm.

I've just punched the figures into an Umbrella calculator and it suggests that, at £700/day they'd be taking home £8k per month net. Times that by 6 and you've got £48k net. So roughly the person is on the equivalent of £70k gross for the full year plus he gets 6 months holiday if he cant find another contract. - I think that's reasonably good but YMMV

Certainly sounds pretty good to me. I think Gazzab was probably assuming that a perm Head of Finance role would pay a bit more than they often do.

[aeropilot]

Olivera said:

aeropilot said:

In my industry, £250 a day INSIDE is the current norm.........which puts me back to 2004/5 levels of net pay.

I wonder how many of the aholes in HMRC would like it if they were told to take a pay cut back to what they were earning 15 odd years ago.

£250 per day is almost sub tradesperson money, never mind skilled engineer/automotive, which I'm guessing is your industry? It's a fked up market if your rates are being driven down to that level.

Yep, tell me about it.

The big players are pushing it all out to India instead (and then wondering why it all goes pear shaped and then there is no one with the skills set left in the UK to fix it/ do it properly)

[Noodle1982]

Has anybody tried out the newest CEST tool?

The client I'm currently contracting too has dismissed any QDos determinations and is only accepting the government's CEST result.

Every contractor I know here has answered it honestly and everyone is showing as being outside.

Job done.

[Olivera]

aeropilot said:

Yep, tell me about it.

The big players are pushing it all out to India instead (and then wondering why it all goes pear shaped and then there is no one with the skills set left in the UK to fix it/ do it properly)

Play hard ball - refuse the stty rates and major on your high value skills in an attempt to negotiate a decent rate.

In all my time contracting I've learnt that being robust on rates is critical to making a good career out of it. Always start high and negotiate down a little if need be. Be prepared to walk away from prospective roles with poor rates.

[aeropilot]

Olivera said:

aeropilot said:

Yep, tell me about it.

The big players are pushing it all out to India instead (and then wondering why it all goes pear shaped and then there is no one with the skills set left in the UK to fix it/ do it properly)

Play hard ball - refuse the stty rates and major on your high value skills in an attempt to negotiate a decent rate.

In all my time contracting I've learnt that being robust on rates is critical to making a good career out of it. Always start high and negotiate down a little if need be. Be prepared to walk away from prospective roles with poor rates.

In normal times I agree with you.
But, my industry has been killed by Covid, and there are too many guys sitting at home desperate for work as a result, so hard ball gets shoved back with the response of, if you don't want it it, there are plenty others out there that will....at that rate.

I was out of work for 8 months last year and was lucky to get back into something....many I know haven't been.

[Clockwork Cupcake]

Olivera said:

In particular I like your Sagaris

I may be putting it up for sale shortly, if you are interested. I just MoT'd it today and it turns out I have done 50-odd miles in the past year and, more worryingly, 300 miles in the past 4 years.

[Clockwork Cupcake]

aeropilot said:

The big players are pushing it all out to India instead (and then wondering why it all goes pear shaped and then there is no one with the skills set left in the UK to fix it/ do it properly)

The trouble with India is that there is an ingrained culture of always saying yes, never admitting that you can't actually do something, never admitting failure, and always saving face. And that is not some prejudiced sweeping generalisation; I mean it's as ingrained as queuing, apologising, and moaning about the weather is to us.

I've had some absolutely lovely Indian colleagues, very knowledgable, and competent, but sadly they have been the exception to the norm.

[Clockwork Cupcake]

aeropilot said:

In normal times I agree with you.
But, my industry has been killed by Covid, and there are too many guys sitting at home desperate for work as a result, so hard ball gets shoved back with the response of, if you don't want it it, there are plenty others out there that will....at that rate.

Kind of like those photos from the Great Depression with men standing around holding signs saying "Will work for food".

[aeropilot]

Clockwork Cupcake said:

aeropilot said:

In normal times I agree with you.
But, my industry has been killed by Covid, and there are too many guys sitting at home desperate for work as a result, so hard ball gets shoved back with the response of, if you don't want it it, there are plenty others out there that will....at that rate.

Kind of like those photos from the Great Depression with men standing around holding signs saying "Will work for food".

In essence, yes.

[bonerp]

So with IR35 back this year the company I provide PSC to has thrown us all under the IR35 bus....grrr

But the agency is now asking whether I want to opt out of the conduct regulations. Having read these multiple times I'm still unclear of its purpose and even more so now I'll be umbrella.

Should I be opting In now?!?

Also what are you guys doing with your Ltd Co's? My accountant has recommended keeping it, but how does tax work being 'employed' under an umbrella? Also won't I be owed tax on account ?! My thoughts are to close it to avoid annual fee's and submissions.

[bonerp]

Clockwork Cupcake said:

aeropilot said:

The big players are pushing it all out to India instead (and then wondering why it all goes pear shaped and then there is no one with the skills set left in the UK to fix it/ do it properly)

The trouble with India is that there is an ingrained culture of always saying yes, never admitting that you can't actually do something, never admitting failure, and always saving face. And that is not some prejudiced sweeping generalisation; I mean it's as ingrained as queuing, apologising, and moaning about the weather is to us.

I've had some absolutely lovely Indian colleagues, very knowledgable, and competent, but sadly they have been the exception to the norm.

they also change frequently to the highest bidder so skills are seldom retained.

[zippy3x]

bonerp said:

So with IR35 back this year the company I provide PSC to has thrown us all under the IR35 bus....grrr

But the agency is now asking whether I want to opt out of the conduct regulations. Having read these multiple times I'm still unclear of its purpose and even more so now I'll be umbrella.

Should I be opting In now?!?

Also what are you guys doing with your Ltd Co's? My accountant has recommended keeping it, but how does tax work being 'employed' under an umbrella? Also won't I be owed tax on account ?! My thoughts are to close it to avoid annual fee's and submissions.

The one thing i absolutely wouldn't do is to move from outside to inside IR35 at the same client doing the same role. Might as well send an email to HMRC, asking them to come and fk you

[Clockwork Cupcake]

zippy3x said:

The one thing i absolutely wouldn't do is to move from outside to inside IR35 at the same client doing the same role. Might as well send an email to HMRC, asking them to come and fk you

Indeed. Despite all assurances to the contrary, we just know this will be the case in reality.

[boiler2003]

bonerp said:

Also what are you guys doing with your Ltd Co's? My accountant has recommended keeping it, but how does tax work being 'employed' under an umbrella? Also won't I be owed tax on account ?! My thoughts are to close it to avoid annual fee's and submissions.

I think the advice to keep the company open is because if you use Entrepreneurs Relief to reduce the tax on liquidation of the company, you will be liable to additional tax if you start a new company in broadly the same line of business within two years of closing down your old company.

In terms of working with an umbrella - they employ you not your company so your company loses it's revenue stream whilst you are working for the employee - you can obviously loan the company money if necessary to pay any residual overheads. If the company trades again, that money would be in the director's loan account and could be repaid without tax implications.

I'm in the same boat and been given similar advice to keep the company open. I've managed to find a client willing to offset some of the additional tax burden with a long term contract so will wait to see what happens over the next year or two.