Even if I didn't go through an agency, and engaged the company directly I still couldn't get work as a contractor because of not being on their preferred suppliers list.
more crackdowns on contractors expected
- Thread starter dowie
- Start date
Even if I didn't go through an agency, and engaged the company directly I still couldn't get work as a contractor because of not being on their preferred suppliers list.
Loophole hey? So will you be volunteering to pay back your personal allowance or is that not a loophole?
I'm not how accounting for Ltd works. Unlike PAYE salary which can be paid out of debt or loan, directors and shareholders can only pay themselves dividends if the their company has profits. Profits which are subject to corporate tax. Yes, the director could take massive employee salary at top tier tax, rather than dividends dictated by shares, I mean - it would be insane thing to do from tax efficiency and accounting point of view, considering standards tools available, but you would probably also get investigated as it would look like you were trying to create prentend technical insolvency.
Soldato
- Joined
- 15 Feb 2012
- Posts
- 3,308
- Location
- 2
If the company want you they put you on the preferred supplier list and engage you.
They could now because they know me and the quality of my work, but not likely when you are an unknown quantity.
Id say i want to agree and this is how it should be.. but it isn't
My current job, Agency knows me and knows my work and its had great feedback off afew companies. Current company im working for through agency want someone to put on books.. But they still use agencies to bring lads onto site to check there quality themselves before debating putting them onto PAYE etc.
I WANT to be on books tbh, will help me secure my mortgage. But the contractor wages i earn is more than the lads on books.. Swings and roundabouts
It's not exactly true. I used to be freelance, and I lost quite a few jobs because there wasn't the right tickbox at the HR/accounting department for 'freelance' work -- the people who want to hire YOU very often have zero control on how they can do it in larger company, it HAS to go thru some process that they can't control, they can't 'just' put you a supplier list.
The other problem I had was having to be VAT registered as a freelance, because it was a lot more complicated to do accounting as I had only 'one' account.
With the LTD it's crystal clear what is business and what is not -- it's simpler on accounting by a country mile.
I became employed after a long stint as freelance JUST to get a mortgage. Bit stupid as I was making a lot less as an employee, but 6 months later I got a mortgage totally easily. I've since left and went back to being independant!
Tbf once im on books ill do 6 months and be taken back off em if its possible and go to subbing as a ltd. Its just for that mortgage acceptance
I like my wage.. employee's are meh so so about it but 50% of this company are subs or agency/umbrella situation anyhow
Associate
- Joined
- 7 Feb 2008
- Posts
- 2,377
- Location
- Surrey
I don't get this thing about it being hard to get a mortgage as a contractor. I just got one in December from Halifax no problem. I've been contracting for just over 4 years.
And on the subject of tax dodging, every company I've worked at has had contractors working there for years the same as permies. A previous company had 2 guys working there nearly 10 years as contractors. Another 2 wanted to go back to their home countries and WFH permanently, so the company just told them both to go Ltd and carried on paying them that way.
Current one has multiple contractors working here for 4 years+, all under direction and control and working alongside permies. I've been here myself for 3 years and am leaving partly due to boredom and partly due to thinking this is too dodgy working at one place so long as a contractor. I would have left last year at the 2 year mark, but they made me an offer I couldn't refuse
.If you ever bring up IR35 or the ethics of working basically as a disguised employee with other contractors, they either don't know what IR35 is or don't think they will ever get done for it, so they think you are mental if you pay any attention to it.
Soldato
- Joined
- 31 May 2009
- Posts
- 21,468
Indeed, i am in a similar self employed situation myself.
These chaps in govt appojnted, long standing jobs, should not be capable of doing the ltd route, simply to avoid tax, I am glad if they make steps to stop it.
Im sure you CAN get a mortgate as a contractor, but if you are an employee with a good credit rating, they fight to give you one instead, it's that simple. No need for 4 years accounts and so on, just tick the box 'employed'.
Associate
- Joined
- 7 Feb 2008
- Posts
- 2,377
- Location
- Surrey
Actually they only asked for 2 years of accounts, but I have been contracting for over 4. They gave me a gift card to the purple PC shop too
My wife is a sole trader and I'm PAYE. When we got our last mortgage, she was asked for two years of accounts. Easy enough to do as she employs an accountant. I was asked for six months of pay slips.
It wasn't a big deal at all, even on a fairly large mortgage.
Actually they only asked for 2 years of accounts, but I have been contracting for over 4. They gave me a gift card to the purple PC shop too
The main issue is if you've been contracting for less than 2 years and want a mortgage, this is probably where most of the comments come from. As you say after 2 years it's generally not very difficult.
That's a really silly question to ask. The HMRC specifically allows for the personal allowance and makes a big deal to tell everyone what it is. It is not a loophole in the slightest. It is much like the 'standard deduction' that the IRS gives to US tax payers. It's just an amount of income that you are allowed to earn where you have to pay 0% income tax.
Paying yourself a minimum wage salary + dividends is clearly a big loophole that the HMRC is now finally doing something about.
Its not a loophole and they aren't doing anything about it apart from removing the tax credit and added a bit of tax onto it. It still exists, if it was a big loophole they would have closed it or put exceptions onto the usage.
Man of Honour
- Joined
- 17 Feb 2003
- Posts
- 29,640
- Location
- Chelmsford
To be fair, there are greater tax evaders than IT contractors that work under umbrella companies.. Labourers, builders, self traders..so forth..
My wife knows a childminder that puts through daft expenses meaning her £25k+ income is virtually untaxed.. and each year she gets away with it.. Even 25% of her new kitchen went through.
How is that ********** fair!. Makes my blood boil.
My wife knows a childminder that puts through daft expenses meaning her £25k+ income is virtually untaxed.. and each year she gets away with it.. Even 25% of her new kitchen went through.
How is that ********** fair!. Makes my blood boil.
She should hope HMRC never find out because they would not take kindly to that!
Admiral Huddy said:
Actually it all depends how she does her accounts. If she works 30 hrs per week from the home childminding, then she is entitled to claim 25% of house running costs and if she doesn't claim the wear and tear allowance then it can be allowable to claim a % of renewal costs like this.
Not saying she is doing it legit, but what has been described could be argued for.