more crackdowns on contractors expected

http://www.cipd.co.uk/pm/peoplemana...-off-payroll-workers-expected-this-month.aspx

The government’s expected clampdown on paying workers via an umbrella company or Personal Service Company (PSC) to pay a lower rate of tax will place a “huge administrative burden” on employers, experts have warned.

Julia Kermode, chief executive of the Freelancer and Contractor Services Association (FCSA), said that any tightening of the rules could force employers to put these individuals onto their payroll as employees.

Her warning came amid reports that chancellor George Osborne will make an announcement in his autumn statement later this month on the use of contractors who work for one company but are set up to avoid paying national insurance contributions.

Under the existing rules, employers also benefit because they end up with smaller national insurance and pensions bills.

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To be fair contractors do take the mickey - I know plenty of people working in IT who are essentially short term employees dodging tax. The daily rate in itself is sufficient to compensate for the additional 'risk' not being in a perm role presents - the tax/NI dodging part is a fair target IMO.

"I think for a long time the writing has been on the wall that either the individual needs to be an employee either of the agency or the business that they are working for, rather than going through any other vehicle. If they are working for you solely for any length of time they will probably have to be treated as an employee. Auto enrolment, holiday entitlement and sick leave will all be part of the mix and things like the national minimum wage could all have an impact."

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Expect LTD company registrations to soar.

maccapacca said:

Expect LTD company registrations to soar.

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this is cracking down on people working through ltd companies

maccapacca said:

Expect LTD company registrations to soar.

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Correct me if I'm wrong but they are different?

http://www.sjdaccountancy.com/about/ourservices/ltd_vs_umbrella.html

maccapacca said:

Correct me if I'm wrong but they are different?

http://www.sjdaccountancy.com/about/ourservices/ltd_vs_umbrella.html

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It's talking about Personal Service Companies ie many single person ltd companies.

Expect the company secretary sector to boom next month.

maccapacca said:

Correct me if I'm wrong but they are different?

http://www.sjdaccountancy.com/about/ourservices/ltd_vs_umbrella.html

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umbrella companies are different to personal service companies - this article is talking about both

Okay I didn't realise it was an HMRC IR35 definition of a Ltd company

Bit of an empty article is there any actual substance?

not yet, you'll have to wait a couple of weeks for the autumn statement

Yes it's not correct people billing only one company and working full time for them.

I'm on my own freelancing but I'm billing four or five clients a month.

The rumour is they're clamping down on single employee ltd companies.

Good.

I use Umbrella companies, If that went down the pan id go CIS and use an accountants services to just as easily sort my tax and expenses.

Unicorn said:

I use Umbrella companies, If that went down the pan id go CIS and use an accountants services to just as easily sort my tax and expenses.

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Or you could just pay tax like everyone else then not feel you're taking the mick using the roads, schools and hospitals we all enjoy.

estebanrey said:

Or you could just pay tax like everyone else then not feel you're taking the mick using the roads, schools and hospitals we all enjoy.

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I pay tax, Just them taxes are then re-used nicely into paying for my fuel and tools i require to do various jobs.

Don't hate it because you can't do it. If we could all screw the taxman im sure we would, it won't last forever and we will all move onto the next legal loophole. When your working 40-60 hours contracting for someone who counts you as a number not an employee i think we deserve something.

Umbrella companies are only used by short term contractors.
For the ignorant, an umbrella is basically when you're employed by your accountant PAYE.

This is a clamp down on low paid IT workers basically.. Contractors who earn big bucks are LTD companies as it's more tax efficient.

This is just the government screwing the bottom end of the market, again.

i have about 10 contractors in my team, 10 permies and 7 "outsourced". The contractors (I'm the manager) are harder work and more "unionised" than the permies. They are more expensive at the bottom line but the charge rate for an FTE is the same regardless. In simple terms in the bad times they are the first to go regardless of skill (and if there is no permie to do the job instead as the manager I'm in trouble). If they all went perm instead all the lesser performers would go first.

It's a pain in the harris for both parties to have to renegotiate every 6 months.

My life would be easier if it was abolished, although that is at the moment when I am trying to plan 1-3 years ahead. If it was just 6 months they would be really useful.

I do get why they do it though - 80k vs 650 a day and all that. Supply and demand.

On the bigger picture, with the (correct IMHO) approach to cutting down tax "efficiencies" they should not be surprised. Permies & employers pay more tax for the same job, contractors know that and it's thier choice.

EOF

I hope this is accompanied by more investment in enforcing the rules.

There's nothing particularly wrong in cutting down on tax efficiencies, indeed in my opinion they should just do away with NI and normalise Income Tax and Dividend Tax so there is no tax "avoidance" possible. What's being spoke about is actually to prevent people working for themselves though which is more of a sledgehammer to crack a nut.

Until an announcement though it's all conjecture and rumour.

Either way, I know I pay more tax as a contractor. Maybe I'm too honest and play by the rules!

Jokester said:

There's nothing particularly wrong in cutting down on tax efficiencies, indeed in my opinion they should just do away with NI and normalise Income Tax and Dividend Tax so there is no tax "avoidance" possible. What's being spoke about is actually to prevent people working for themselves though which is more of a sledgehammer to crack a nut.

Until an announcement though it's all conjecture and rumour.

Either way, I know I pay more tax as a contractor. Maybe I'm too honest and play by the rules!

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Claim everything, that mile you do thats a 45p tax deduction.. That clothes washing allowance that can come off your tax bill, Them new screwdrivers you needed to do your job.. They come off your tax bill also!

Its the only way to win