more crackdowns on contractors expected

[alx]

Rubbish. If done right and legally I might add combined tax and in rates on earnings are in the range of 10 to 18%. When my gf a few years ago was contracting and earning £75k per annum she was paying around 14k a year in tax and ni that's about the same as a £40k a year employee.

It was a bit of a blanket statement I'll admit, with the higher end of day rates it's harder to keep your tax rates that low from my knowledge/experience. Out of interest when your gf was earning £75k as a contractor what would the equivalent staff salary be for the same role? Guessing more than £40k?

 

[FutileBreadMachine]

Was reading about this yesterday. If it goes through as they've described it will be the death of contracting for 1 man bands. Makes no sense - need to develop an app in 6 months? Have to hire a permie who you will have no work for after 6 months...

 

[SPG]

Rates will have to go up, simple as that. One man bands are are just tadpoles in the pond.

 

[FutileBreadMachine]

Rates will have to go up, simple as that. One man bands are are just tadpoles in the pond.

From how they've described it, if you work for the same client for more than 1 month you have to go on their payroll, so you won't be able to charge as much since you will effectively be a permanent employee and they will have to pay your pension, NI, employee benefits. I used a calculator to check how much I would have to be paid as a permie to get the same take-home and it was a figure no company would pay a permanent IT geek for.

The market is about to be flooded with people looking for permanent employment. Knew this would happen one day, now the big consultancies will be guaranteed all the work

 

[Mynight]

There will be a way around it. There always seems to be another loophole.

Might have to close my side business and rely on being a sparky then if this goes through (don't always have enough on the go if this 1 month 1 contract bit is true).

 

[d_brennen]

CEOs of piddle taking multinationals will be giving themselves a hernia laughing at this. They kick the hornets nest and it's the cleaners and IT nerds that take a wallet kicking. Thanks Dave

 

[BusError]

Also, There is no permanent job that would pay me what I'm worth... in high level engineering, you cap at 80 GRAND MAX with no hope of going higher, ever. As a contractor I do 120k+ because I'm an expert at my stuff. I'm *vastly* more valuable than mid-managers who makes 90k sharpening their pencils, but the current ethos of the workplace is that engineers are not 'worthy' while idiots with an MBA are.

Also, I don't /want/ a perm job. I want 6 months projects, I don't want company politics, I want to be paid by the hour -- take half a week off if I like, and take another client if the current one sucks.

I personally think it's the future of employment -- 'permies' think they have job stability, but as a developer, I've never stayed more than 4 years in a company, and I've been working for 25 years as one.

I think if this comes to pass, it'll just be a question of teaming up with someone else, and share the proceeds. Ie, a 2 man LTD instead of a 1 man one.

 

[BusError]

CEOs of piddle taking multinationals will be giving themselves a hernia laughing at this. They kick the hornets nest and it's the cleaners and IT nerds that take a wallet kicking. Thanks Dave

That. And Fecebook paying 4k in taxes, and all the other ones. While us IT nerds perhaps make money, but also spend it *here*.

 

[peterwalkley]

I think this is a very short-sighted. Companies want flexibility for specialist staff, this is going to cost them more in the long run because they will have to spend time haggling with consultancies over scope and duties instead of taking on a contractor who will do more or less as they are asked once on the daily rate.

 

[alx]

Also, There is no permanent job that would pay me what I'm worth... in high level engineering, you cap at 80 GRAND MAX with no hope of going higher, ever. As a contractor I do 120k+ because I'm an expert at my stuff. I'm *vastly* more valuable than mid-managers who makes 90k sharpening their pencils, but the current ethos of the workplace is that engineers are not 'worthy' while idiots with an MBA are.

Also, I don't /want/ a perm job. I want 6 months projects, I don't want company politics, I want to be paid by the hour -- take half a week off if I like, and take another client if the current one sucks.

I personally think it's the future of employment -- 'permies' think they have job stability, but as a developer, I've never stayed more than 4 years in a company, and I've been working for 25 years as one.

I think if this comes to pass, it'll just be a question of teaming up with someone else, and share the proceeds. Ie, a 2 man LTD instead of a 1 man one.

I was reading an article a few months ago where some companies also believed just having contractors was the way forward (obviously doesn't work in every scenario). Less burden for the company and more money in the back pocket for the employee.

 

[Cosimo]

Good.

Agreed.

 

[dowie]

There will be a way around it. There always seems to be another loophole.

Might have to close my side business and rely on being a sparky then if this goes through (don't always have enough on the go if this 1 month 1 contract bit is true).

there doesn't have to be - for example there isn't much tax advantage to being a contractor in Australia AFAIK

Also, There is no permanent job that would pay me what I'm worth... in high level engineering, you cap at 80 GRAND MAX with no hope of going higher, ever. As a contractor I do 120k+ because I'm an expert at my stuff. I'm *vastly* more valuable than mid-managers who makes 90k sharpening their pencils, but the current ethos of the workplace is that engineers are not 'worthy' while idiots with an MBA are.

Also, I don't /want/ a perm job. I want 6 months projects, I don't want company politics, I want to be paid by the hour -- take half a week off if I like, and take another client if the current one sucks.

I personally think it's the future of employment -- 'permies' think they have job stability, but as a developer, I've never stayed more than 4 years in a company, and I've been working for 25 years as one.

I think if this comes to pass, it'll just be a question of teaming up with someone else, and share the proceeds. Ie, a 2 man LTD instead of a 1 man one.

well if you set up a small consultancy then fair enough - your consultancy can bid for projects, you'll have more incentive to pay yourself via salary/bonus as any dividends would be divided according to the % you own

I'm sure there will be a few small consultancies being set up if this sort of thing goes through

the problem is people essentially being employees but being paid off the books/dodging tax and NI

 

[Greebo]

It was a bit of a blanket statement I'll admit, with the higher end of day rates it's harder to keep your tax rates that low from my knowledge/experience. Out of interest when your gf was earning £75k as a contractor what would the equivalent staff salary be for the same role? Guessing more than £40k?

Yeah probably about £50k ish I would imagine. So a £50k employee would pay far more tax and NI than the £75k contractor.

 

[Kemik]

What a lot of contractors forget when they see the £££ signs is that you get zero job security and zero benefits. When you factor in pension and the other benefits plus the admin fees of running the limited company the difference in salary isn't always as large as a permanent employee.

The changes to the dividend taxes will have some impact on take home now. It's not as good as it used to be for contractors to use a limited company.

 

[alx]

well if you set up a small consultancy then fair enough - your consultancy can bid for projects, you'll have more incentive to pay yourself via salary/bonus as any dividends would be divided according to the % you own

I'm sure there will be a few small consultancies being set up if this sort of thing goes through

the problem is people essentially being employees but being paid off the books/dodging tax and NI

Thing is employers/companies like it as well (which is why they hire contractors and not just permanent staff) - they don't need to provide training, progression, pension, holiday etc etc and they can basically hire and fire them as they please.

I'm not saying the tax issues shouldn't be addressed, but the way to do it isn't by basically not allowing contractors at all.

 

[Greebo]

Was reading about this yesterday. If it goes through as they've described it will be the death of contracting for 1 man bands. Makes no sense - need to develop an app in 6 months? Have to hire a permie who you will have no work for after 6 months...

No problems there as no rights for two years so you just terminate their employment after 6 months.

 

[mid_gen]

Definitely in favour of clamping down contractors that work as employees. Not bitter at all, I contracted for 5-6 years and did very nicely out of it....but I've known people doing it at the same 'client' for 2-3 years, it's a joke.

The issue isn't companies being able to hire contract staff...it's single-client, single-employee LTD companies masquerading as 'businesses' when in reality they are just a tax-avoidance vehicle.

 

[alx]

Yeah probably about £50k ish I would imagine. So a £50k employee would pay far more tax and NI than the £75k contractor.

Agreed, but once you start earning £100k plus as a contractor it probably shifts the other way due to how the tax system works, expenses being a fairly fixed cost all things being equal etc and staff salaries leveling off.
Also as someone technical in a niche area you probably pay more tax as a contractor due to the day rates you can command being significantly better than the equivalent staff salary.

 

[leaskovski]

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.

If we all screwed the tax man, this country wouldn't exists and everyone would be up in arms... just like Greece.