more crackdowns on contractors expected

[dowie]

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.

I'm sure they do like not having to provide pensions and getting employees on the cheap - that isn't necessarily a good reason why we shouldn't have these changes

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.

when people talk about paying more tax they tend to be referring to the % tax you pay not what you hypothetically might make in absolute terms with a salary

contractors tend to pay much less in tax

 

[Tunney]

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

The government is trying to clamp down on the likes of Facebook too. This isn't an either/or situation.

 

[Catanonia]

Time to make the missus earn her wedge as a company secretary. mmm, 1 hour a day to do the books and a wage for it.

Do a couple of foreigners to ensure during a 12 month period I am not working for the same company. Wonder if the neighbours want their grass cutting during the weekend for a cheap + vat price and invoice.

 

[dowie]

The government is trying to clamp down on the likes of Facebook too. This isn't an either/or situation.

yup - similarly whenever we have cuts to benefits people bleat about tax avoidance

they're trying to tackle companies moving profits offshore, they've cracked down on BTL landlords, they've cracked down on buying properties through a company and they're cracking down on people who should be employees dodging tax/being paid off the books

fact is the Chancellor genuinely is trying to get the tax we're owed in addition to cutting spending

 

[Freakbro]

fact is the Chancellor genuinely is trying to get the tax we're owed in addition to cutting spending

I think he's finally doing more of the former because he's realised he can't do as much of the latter

 

[alx]

I'm sure they do like not having to provide pensions and getting employees on the cheap - that isn't necessarily a good reason why we shouldn't have these changes



when people talk about paying more tax they tend to be referring to the % tax you pay not what you hypothetically might make in absolute terms with a salary

contractors tend to pay much less in tax

What I'm getting at is that some people pay more absolute tax as a contractor than they would as an equivalent staff member, so the governement benefits from this situation in regard to taxes.

I'm not saying the tax rules for contractors shouldn't be looked at/altered, but sometimes you need to look at the bigger picture.

 

[dowie]

I think he's finally doing more of the former because he's realised he can't do as much of the latter

he's been doing both, it isn't like he can only introduce one change at a time - I'm sure there will be further cuts announced too in two weeks

 

[dowie]

What I'm getting at is that some people pay more absolute tax as a contractor than they would as an equivalent staff member, so the governement benefits from this situation in regard to taxes.

I'm not saying the tax rules for contractors shouldn't be looked at/altered, but sometimes you need to look at the bigger picture.

maybe you'll get more tax still from consultancies - a consultant probably earns much more than typical IT staff and if there is a genuine need for short term project work rather than simply paying people off the books then companies can still bring in people - for long term 'contractors' who are essentially just staff being paid off the books they could just as easily be paid PAYE on a high salary

 

[Tunney]

fact is the Chancellor genuinely is trying to get the tax we're owed in addition to cutting spending

I still worry about enforcement though. Adding new laws needs to be backed up by greater investment in prosecuting those who break these rules. Unfortunately, enforcement budgets are going in the opposite direction.

 

[anything I don't mind]

The government just can't get enough money can they. All the rich people (and politicians) of course will be exempt and will continue claiming expenses for everything. Despicable realy.

 

[dowie]

I still worry about enforcement though. Adding new laws needs to be backed up by greater investment in prosecuting those who break these rules. Unfortunately, enforcement budgets are going in the opposite direction.

true - if anything increasing HMRC's budget ought to bring in more revenue

frankly we ought to put tax inspectors on private sector like bonus schemes and start poaching them from tax consultancies/big 4 etc..

 

[alx]

maybe you'll get more tax still from consultancies - a consultant probably earns much more than typical IT staff and if there is a genuine need for short term project work rather than simply paying people off the books then companies can still bring in people - for long term 'contractors' who are essentially just staff being paid off the books they could just as easily be paid PAYE on a high salary

Regarding your latter point this often isn't the case for technical/niche roles - salaries level off and won't go any higher unless you go into management. This is why some people like going contract because they get well paid for having technical skills, and you just can't get an equivalent staff salary to match.

 

[dowie]

Regarding your latter point this often isn't the case for technical/niche roles - salaries level off and won't go any higher unless you go into management. This is why some people like going contract because they get well paid for having technical skills, and you just can't get an equivalent staff salary to match.

that isn't necessarily true, there are companies paying rather well for technical people - frankly if a company can employ a contractor on a long term contract where they're essentially an employee anyway then they can pay a similar-ish rate for an employee (albeit slightly reduced to cover pension etc..)

some contractors no doubt are taking the mickey and are blagging roles, jumping between contracts - but if someone is genuinely really highly skilled and valuable then you might well see pay increases - if some of these companies are reliant on these long term highly paid contractors then they'll have to pay some of them well to keep them on after these changes come in... others who aren't so essential will suddenly find they can't justify the pay they want

 

[Catanonia]

Government agencies with strict banding pay peanuts and get monkeys. Without contractors on higher salaries, the skills would not be available and many projects with suffer (more than they are).

As a contractor, I despair at the waste spent on contractors tbh. If government agencies would just stop their stupid banding / pay policies and paid the proper wage, there would be no need for contractors and the IT sections of government would actually work at a MUCH lower cost and 1/2 the time if not more.

But whilst they don't, I will take the work quite happily. If they paid me what I am worth (specialist in a field) then I would happily take a permie job with them.

My experience of over 3 years contracting in government IT

 

[alx]

that isn't necessarily true, there are companies paying rather well for technical people - frankly if a company can employ a contractor on a long term contract where they're essentially an employee anyway then they can pay a similar-ish rate for an employee (albeit slightly reduced to cover pension etc..)

some contractors no doubt are taking the mickey and are blagging roles, jumping between contracts - but if someone is genuinely really highly skilled and valuable then you might well see pay increases - if some of these companies are reliant on these long term highly paid contractors then they'll have to pay some of them well to keep them on after these changes come in... others who aren't so essential will suddenly find they can't justify the pay they want

This is just from my experience in the oil industry where even though the salaries are quite high, the contracting rates are very good/even better, especially for experienced technical people. Maybe it's just the oil industry where there is a relatively large difference in staff salaries vs contracting rates - I know for a fact that over the last 5 years or so contracting rates have increased significantly more than staff salaries.

 

[Catanonia]

Also government agencies should stop giving IT contracts to the BIG 5 and allow smaller companies with MUCH higher skill sets to complete the work in 1/2 the time with 1/2 the people / costs.

So much waste with muppets managing muppets and only the contractors actually getting things done but surrounded by red tape and the oil tanker movements of the big 5.

All of this will reduce the need for independent Ltd single person contractors and solve the problem in a stroke.

 

[Greebo]

This is just from my experience in the oil industry where even though the salaries are quite high, the contracting rates are very good/even better, especially for experienced technical people. Maybe it's just the oil industry where there is a relatively large difference in staff salaries vs contracting rates - I know for a fact that over the last 5 years or so contracting rates have increased significantly more than staff salaries.

No its every sector. In pharmecutical you get paid around £50 to £60k but contracting rates are about £550 a day so if you do work all year as a contractor you can get £143k per annum for doing what they will pay somebody in house to do for £60k max.

Of course there are company car/pensions/employers NI/sickness/redundancy liability etc to add on the £50-£60k in house cost so say another £20-25k in employment costs.

But that still only gets you to £70 - £85k and they are quite happy paying up to £140k for contractors. As being said, if companies were prepared to pay closer to the going rate for permanent staff then there wouldn't be so many one man contracting companies around and this would never have been an issue to deal with.

The reason my gf was never made a permanent employee and spent 3 year contracting fro the same company full time was that the company had a head count freeze during that period and there were not allowed to increase employee numbers so there was lots of contractors used instead as these numbers don;t count

We will just ignore that fact that over these 3 years, the hundreds of full time contractors they used at twice the cost will have cost them double compared to employing them directly.

 

[Gilly]

Also government agencies should stop giving IT contracts to the BIG 5 and allow smaller companies with MUCH higher skill sets to complete the work in 1/2 the time with 1/2 the people / costs.

So much waste with muppets managing muppets and only the contractors actually getting things done but surrounded by red tape and the oil tanker movements of the big 5.

All of this will reduce the need for independent Ltd single person contractors and solve the problem in a stroke.

Government agencies are coming under increasing pressure to manage services themselves and use SMEs.

I am worried for their futures in this regard, but my company is one of the big 5 and we have a share of the biggest contract, and no contractors at all

 

[Bear]

As a contractor, I don't have a problem with paying more tax, if they want me to pay more NI and income tax fine, but the way they are doing it will have unintended consequences.

The way they are talking, seems to imply anyone that has been contracting for a long time for one client is a permanent employee and so should be on the pay roll is a load of nonsense.

I contract for a defense company and if anyone knows anything about defense projects know that last for ages, I've been contracted to a project for years and am still working on it, all the while my position has been advertised as a permie role and had no takers. On top of this I fly every week from Bucks to Scotland to work for this company, in fact like many contractors that work all over the country.

If I was to be forced onto the pay roll, I wouldn't be able to work there any longer, because their salary bands would not allow the headline cost so I wouldn't be able to afford my travel costs and digs up in Edinburgh. So I would have to find a local job and a company the other end of the country loses a flexible resource with a set of narrow requirements. The only reason I work in Scotland in the first place was because I was made redundant and couldn't find work anywhere near me.

If what is implemented is what is currently rumored, it could destroy the flexible workforce many companies rely on, as they cant recruit from the local areas they are in, Scotland being a prime example.

Before anyone says, why don't I move up to Scotland then, my wife is an HR director of a large US company and works locally so I don't intend to leave her for a job.

 

[platypus]

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.

You deserve being able to avoid tax because you choose to work 60 hours for someone?