Budget crackdown on self employed

[Guffy]

Final nail in the coffin for contractors?

People in staff positions in my industry are already on a par with contractors, yet contractors have a key role for all the short term projects out there.

Buttocks.

https://www.bbc.co.uk/news/business-45822650

[Deep Thought]

Guffy said:

Final nail in the coffin for contractors?

People in staff positions in my industry are already on a par with contractors, yet contractors have a key role for all the short term projects out there.

Buttocks.

https://www.bbc.co.uk/news/business-45822650

Thats been on the radar for some time. It was introduced to the public sector April '17.

Surprised theres pay parallel in your organisation between contractors and permies doing the same job. In my part of the industry its a x3 multiplier (or i wouldnt be doing it )

I'd expect generally a x2 multiplier in favour of contracting.

I dont think its a final nail in the coffin for contractors - it just means companies will end up paying more in day rates to help offset an inside IR35 role.

Edited by Deep Thought on Thursday 11th October 11:18

[aeropilot]

Deep Thought said:

I'd expect generally a x2 multiplier in favour of contracting.

I dont think its a final nail in the coffin for contractors - it just means companies will end up paying more in day rates to help offset an inside IR35 role.

Not x2 in mine, about x1.5.........

Am only really staying freelance because I'm in my late 50's and chances of a staff job are nil (not that I'd want to work staff for any of the useless companies I freelance for, not to mention that don't want to take on extra staff for short or medium term projects) and I've already been fecked over twice in my working life in regards my pension (or whats left of it)

Whatever crap that gets dolled out by HMRC/Treasury in the coming decade, I'll just have to put the extra jars of Vaseline on expenses and just take it and if anything quit work earlier than planned.

[Deep Thought]

aeropilot said:

Not x2 in mine, about x1.5.........

Am only really staying freelance because I'm in my late 50's and chances of a staff job are nil (not that I'd want to work staff for any of the useless companies I freelance for, not to mention that don't want to take on extra staff for short or medium term projects) and I've already been fecked over twice in my working life in regards my pension (or whats left of it)

Whatever crap that gets dolled out by HMRC/Treasury in the coming decade, I'll just have to put the extra jars of Vaseline on expenses and just take it and if anything quit work earlier than planned.

I'm approaching a similar situation myself. I am 49 but i'd rather persist with contracting as long as i can and try and see out my full time working life doing it. Definitely not feeling the love for "going permie" based on my own previous experience and what i see happening day to day in the organisations i work in.

One of the upsides of it all may be that we might see a significant percentage of contractors leave our respective industries which opens up opportunities. Also i think the change associated with Brexit will have a positive effect on the number of contracts out there. The other upside is that contract rates may go up (but probably not enough to compensate for IR35 implications)

[x5x3]

the key phrase in that article seems to be "It is now looking at demanding that firms which use personal service company contractors take legal responsibility for ensuring "off-payroll" contractors stick to the tax rules known as IR35."

How is that different to now and how will that be enforced?

If a contractor is not caught by the IR35 rules currently then nothing will change surely?

[Deep Thought]

x5x3 said:

the key phrase in that article seems to be "It is now looking at demanding that firms which use personal service company contractors take legal responsibility for ensuring "off-payroll" contractors stick to the tax rules known as IR35."

How is that different to now and how will that be enforced?

If a contractor is not caught by the IR35 rules currently then nothing will change surely?

It will be down to the company to make the decision and they will be liable if its not correct. A lot of public sector companies opted for a blanket approach or defaulted to "inside IR35".

There is a school of thought that says the private sector wont be anywhere near as risk averse as the public sector so we may see less of this.

It also opens the door at the "flip over" point that if an individual has been deeming themselves outside of IR35 and their employer deems them inside then HMRC may chose to investigate and attempt to back tax.

[aeropilot]

x5x3 said:

the key phrase in that article seems to be "It is now looking at demanding that firms which use personal service company contractors take legal responsibility for ensuring "off-payroll" contractors stick to the tax rules known as IR35."

I haven't contracted to a single firm in the last 15 years that has even known what IR35 is, as their HR departments haven't historically had any reason to know what it is.
As that BBC report states, the 'problem' is Treasury/HMRC have no understanding of the real world.....as you'd expect from 'career' Civil Serpents.

[Fittster]

Isn't this threatened every budget and eventual fizzles out?

Considering the problems within the government currently faces I can't see the budget containing any thing controversial.

[Guffy]

Yeah, i'm pretty much in the same boat as you Deep Thought, was hoping to get another 10 years contracting then that's me.

Two close friends (permies) have a similar role to me and if you factor in the whole package, there's virtually no difference.

Edited by Guffy on Thursday 11th October 15:21

[x5x3]

I would think the private sector would be very reluctant to class contractors as caught by IR35 - it just opens the gate to a) HMRC asking for employer's NI and b) the contractor asking for holiday/sick pay etc.

[Deep Thought]

Fittster said:

Isn't this threatened every budget and eventual fizzles out?

Considering the problems within the government currently faces I can't see the budget containing any thing controversial.

This time it is expected to go through as they applied this to the private sector last year and its viewed as just being a matter of time before they roll it through to the private sector. Also theres been public consultation on it.

I'd expect it to be in for Apr 2020 at the latest. "Maybe" Apr 2019

Edited by Deep Thought on Thursday 11th October 13:48

[aeropilot]

Deep Thought said:

Fittster said:

Isn't this threatened every budget and eventual fizzles out?

Considering the problems within the government currently faces I can't see the budget containing any thing controversial.

This time it is expected to go through as they applied this to the private sector last year and its viewed as just being a matter of time before they roll it through to the private sector.

If they do, most of the big infrastructure projects that are about to happen or projected to happen in the next 5 years will implode or be impossible to do, such as HS2, 3rd LHR runway, East Thames crossing, Crossrail2 and any new Nuc power station including current Hinkley Point etc.,etc.
There's a lot of current aviation upgrade projects around to meet new EU mandated security regs that only have a chance of meeting the deadline dates as is largely due to experienced freelance/contract staff.

[Pete102]

Without a doubt this is coming, the question is when.

April 2019 would be a massive stretch IMO and cause holy hell in the process. Add in the back drop of Brexit and I think its a recipe for disaster. April 2020 would be more pragmatic, providing the govt. with a quick win in the public eye whilst giving the private sector time to organise.

[Deep Thought]

Pete102 said:

Without a doubt this is coming, the question is when.

April 2019 would be a massive stretch IMO and cause holy hell in the process. Add in the back drop of Brexit and I think its a recipe for disaster. April 2020 would be more pragmatic, providing the govt. with a quick win in the public eye whilst giving the private sector time to organise.

It would yes. It was an unwholly mess when they implemented it in the Public Sector though and it didnt stop them.

I would say Apr 2020 is the reality of it, but nothing surprises me any more with HMRC.

[Deep Thought]

aeropilot said:

If they do, most of the big infrastructure projects that are about to happen or projected to happen in the next 5 years will implode or be impossible to do, such as HS2, 3rd LHR runway, East Thames crossing, Crossrail2 and any new Nuc power station including current Hinkley Point etc.,etc.
There's a lot of current aviation upgrade projects around to meet new EU mandated security regs that only have a chance of meeting the deadline dates as is largely due to experienced freelance/contract staff.

Agreed - but out of curiosity and playing Devils Advocate - is someone really self employed if they can see five years worth of work ahead of themselves in the one role, for the same company, working on the same team?

[prand]

Deep Thought said:

I'm approaching a similar situation myself. I am 49 but i'd rather persist with contracting as long as i can and try and see out my full time working life doing it. Definitely not feeling the love for "going permie" based on my own previous experience and what i see happening day to day in the organisations i work in.

One of the upsides of it all may be that we might see a significant percentage of contractors leave our respective industries which opens up opportunities. Also i think the change associated with Brexit will have a positive effect on the number of contracts out there. The other upside is that contract rates may go up (but probably not enough to compensate for IR35 implications)

Similar to me, but I've swung the other way. I managed to find a permanent job at a big global firm 5 mins from my house, and although not on the same contractor money, they offer some nice terms, like a 20% pension. In some ways its quite nice to be back on PAYE too . I've been watching the news and gradual erosion of benefits and threats to contractors from tax & income rule changes, and although I wasn't too worried, as there will always be a need for contractor type employees, it's nice not have to worry and keep track of the changes.

[Pete102]

Deep Thought said:

Agreed - but out of curiosity and playing Devils Advocate - is someone really self employed if they can see five years worth of work ahead of themselves in the one role, for the same company, working on the same team?

Just to swing it around, are they really permanent employees if they are out of a job in 5 years time? its definitely a muddy area that is filled quite well (IMO) by contractors just not handled brilliantly in terms of tax and the HMRC.

[Deep Thought]

Pete102 said:

Deep Thought said:

Agreed - but out of curiosity and playing Devils Advocate - is someone really self employed if they can see five years worth of work ahead of themselves in the one role, for the same company, working on the same team?

Just to swing it around, are they really permanent employees if they are out of a job in 5 years time? its definitely a muddy area that is filled quite well (IMO) by contractors just not handled brilliantly in terms of tax and the HMRC.

I absolutely agree, however does that not make them temporary employees, rather than self employed contractors?

I can see why HMRC is scrutinising this area (even though i am in it myself) - you only have to look at the furore around the BBC and TV presenters to see why they are attempting to tighten up on it.

[Deep Thought]

x5x3 said:

I would think the private sector would be very reluctant to class contractors as caught by IR35 - it just opens the gate to a) HMRC asking for employer's NI and b) the contractor asking for holiday/sick pay etc.

What will happen though is what has happened in the public sector - the Employers NI, Apprenticeship Levy and requirement for paid annual leave come out of the day rate that the agency receives.

They'll still work through agencies pay them £XXX per day. The agency will then remove their fee, ENI and Apprentiship Levy charges, then set aside an amount to allow for annual leave (or the contractor can use an Umbrella to do the same thing). Out of whats left the contractor will then pay PAYE.

Edited by Deep Thought on Thursday 11th October 15:35

[Deep Thought]

prand said:

Deep Thought said:

I'm approaching a similar situation myself. I am 49 but i'd rather persist with contracting as long as i can and try and see out my full time working life doing it. Definitely not feeling the love for "going permie" based on my own previous experience and what i see happening day to day in the organisations i work in.

One of the upsides of it all may be that we might see a significant percentage of contractors leave our respective industries which opens up opportunities. Also i think the change associated with Brexit will have a positive effect on the number of contracts out there. The other upside is that contract rates may go up (but probably not enough to compensate for IR35 implications)

Similar to me, but I've swung the other way. I managed to find a permanent job at a big global firm 5 mins from my house, and although not on the same contractor money, they offer some nice terms, like a 20% pension. In some ways its quite nice to be back on PAYE too . I've been watching the news and gradual erosion of benefits and threats to contractors from tax & income rule changes, and although I wasn't too worried, as there will always be a need for contractor type employees, it's nice not have to worry and keep track of the changes.

Indeed - and they will erode the benefits to the point that the contractor pool will shrink significantly as people throw the towel in and go back to permie work.

The IT industry example, along with construction, etc, relies on a large flexible contract workforce to get ad hoc projects delivered. Whos going to do them when people have left contracting because all the incentives have gone, but all the downsides remain - expected to work away from home (then at your own cost), budgetting for time "on the bench", no training, etc, etc.