more crackdowns on contractors expected

The tricky thing and probably the crux of the issue is that an employee is an employee.

A contractor is not, they are supplying a service, company to company.
 
In the balance of things most contractors want to stay in contract with the same company for as long as possible, but your experience may vary...
 
Uther said:
Fixed? ;)
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Sure! Its legal and it keeps my bills down so i don't care right now
As above though

The umbrella system works for 18 months MAXIMUM.
If your going to be there any longer than 18 months your no longer a short term worker and must be paid another way

Most folk do want a long contract including me but they just don't come about so im here and there at the moment
 
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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Referring to your last sentence, people often earn significantly more in an equivalent contract position to the point that it wouldn't surprise me if they paid a similar amount or more tax in total thanvs staff (but as a percentage of earnings tax as a contractor is less).
 
Umbrella companies are small fry in comparison to multinational companies who pay pretty much no tax at all in relative terms.

*very small fry *
 
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mattyfez said:
The tricky thing and probably the crux of the issue is that an employee is an employee.

A contractor is not, they are supplying a service, company to company.
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People often forget this and think a contractor is just some high earning tax dodger, missing the point about why lots of companies like employing contractors and the benefits it gives them.
 
Some, but my experience varies, financial services ops and IT. So not all the time.

Point about big business doing the same taken, however why would hmrc go after the harder target?
 
CapitalOne said:
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
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Contractors should always be treated differently than your employees, when you say that contractors are more "harder" to fit in, are you expecting them to do additional work outside of their contract? if so, I can completely understand why they become unionised.

when a contractor becomes part of the parcel, and treated exactly the same as a employee, the contractor gets a much higher risk of investigation due to direction and control, this normally happens naturally if a contractor has been there for over a year and a half. Its very hard for the contractor not to annoy their client if they aren't flexible after that amount of time either. Contractors should only be bought in as a project resource, not to do BAU work. If your contractors are that bad, just bin them off and get new ones ;)

Contractors under a umbrella usually pay a lot more tax than a fulltime permanent employee, the amount of NI they pay is insane.

The one man band contract market is going to be destroyed if this goes ahead anyway, not to mention the dividend tax, and the new expenses rule. You will see around 50-60% of contractors going back to permie land from April next year.
 
ETA: i understand someone supplying capacity on demand and charging a premium, but not expecting annual payrises and looking to stay for many years?

FishThrower said:
Contractors should always be treated differently than your employees, when you say that contractors are more "harder" to fit in, are you expecting them to do additional work outside of their contract? if so, I can completely understand why they become unionised.

when a contractor becomes part of the parcel, and treated exactly the same as a employee, the contractor gets a much higher risk of investigation due to direction and control, this normally happens naturally if a contractor has been there for over a year and a half. Its very hard for the contractor not to annoy their client if they aren't flexible after that amount of time either. Contractors should only be bought in as a project resource, not to do BAU work. If your contractors are that bad, just bin them off and get new ones ;)

Contractors under a umbrella usually pay a lot more tax than a fulltime permanent employee, the amount of NI they pay is insane.

The one man band contract market is going to be destroyed if this goes ahead anyway, not to mention the dividend tax, and the new expenses rule. You will see around 50-60% of contractors going back to permie land from April next year.
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Sorry you misunderstand me. I mean, for example they ask for a rate rise at every renewal (twice a year) and not all permies expect the lesser rise the payroll buget allows (once a year). They also (where I work) would not consider working more hours than contracted as freely as the permies. Finally, they fell just as entitled to "understanding" as permies (painful management overhead I regret to say but true). If they wanted a permie life, do that. I do appreciate what I do is as niche as diamond dog collars but I've rarely heard a contractor when not given a raise, month off, or asked to work a weekend say "well I'm a service provider so fair enough". Permies don't get overtime BTW
 
mattyfez said:
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.
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no, someone else made that mistake - the OP refers to both umbrellas and ltd companies

a PSC is a ltd company
 
After all that, I forgot to add all they want is to stay as long as possible.

What am I doing about it? Joined 18 months ago, it was 70% contract now it's 50%, target for end of 16 is 30% which is about right for the budget I have to manage.
 
CapitalOne said:
Sorry you misunderstand me. I mean, for example they ask for a rate rise at every renewal (twice a year) and not all permies expect the lesser rise the payroll buget allows (once a year). They also (where I work) would not consider working more hours than contracted as freely as the permies. Finally, they fell just as entitled to "understanding" as permies (painful management overhead I regret to say but true). If they wanted a permie life, do that. I do appreciate what I do is as niche as diamond dog collars but I've rarely heard a contractor when not given a raise, month off, or asked to work a weekend say "well I'm a service provider so fair enough". Permies don't get overtime BTW
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Sorry, my mistake, I completely agree that some contractors want the best of both worlds. If the contractor wants a rate increase, the best way for them to approach it is "pay me XXX amount, or I'm not renewing", 95% of the time they bottle it and suck it up and end up staying.

out of curiosity (and off topic!), are your contractors through a MSP, and then through an agency by any chance? most MSPs absolutely take the mick out of the client and also the contractor.. its not unusual for a MSP to charge the end client around £350-£400 a day for a desktop support resource, and then the engineer would actually get £200 a day tops. project managers gets charged out over double that through an MSP.

oh, and lastly, if you ever need any Windows Infrastructure contractors on board (SCCM, SCOM, Powershell, PKI), give me a shout :D
 
CapitalOne said:
They also (where I work) would not consider working more hours than contracted as freely as the permies.
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Ah, a manager who expects his workers to work extra for nothing, what a surprise..

Good for them to be honest, the permies should follow suit.
 
FishThrower said:
Sorry, my mistake, I completely agree that some contractors want the best of both worlds. If the contractor wants a rate increase, the best way for them to approach it is "pay me XXX amount, or I'm not renewing", 95% of the time they bottle it and suck it up and end up staying.

out of curiosity (and off topic!), are your contractors through a MSP, and then through an agency by any chance? most MSPs absolutely take the mick out of the client and also the contractor.. its not unusual for a MSP to charge the end client around £350-£400 a day for a desktop support resource, and then the engineer would actually get £200 a day tops. project managers gets charged out over double that through an MSP.

oh, and lastly, if you ever need any Windows Infrastructure contractors on board (SCCM, SCOM, Powershell, PKI), give me a shout :D
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We have an engagement company, i.e an inhouse agency. If you aren't on the largely useless Preferred Supplier List, they just engage directly. I am sure there is a corporate fee as they have staff onsite, but if I hire there is no cut bar £18 a week for payroll. We negoitiate on the contract rate for the contractor becuase of that. In this case it really is about who you know to get a direct referral.

A2Z said:
Ah, a manager who expects his workers to work extra for nothing, what a surprise..

Good for them to be honest, the permies should follow suit.
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To be fair, its the same for me - so I understand that. I don't get any bonus for keeping the cost hidden it doesnt work like that. Try and find a company in my industry that pays overtime and if you find one let me know.

ETA I work 3 weekends out of 4 and 10 hours a day weekdays on a 35 hour a week contract with a "whatever you need to do" clause

ETA 2 i do secret time off in lieu for my team to make ammends, but i dont get that
 
alx said:
Referring to your last sentence, people often earn significantly more in an equivalent contract position to the point that it wouldn't surprise me if they paid a similar amount or more tax in total thanvs staff (but as a percentage of earnings tax as a contractor is less).
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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.
 
alx said:
People often forget this and think a contractor is just some high earning tax dodger, missing the point about why lots of companies like employing contractors and the benefits it gives them.
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Some are like that. A lot aren't and will work for one client for year after year or as long as the gravy train allows. I agree it's been a stupid situation where that could go on unchecked and that person not be treated as an employee.
 
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