That's my problem, obviously. It was more a reply to the moaning about contractors being paid mode than their permie counterparts.
The All Things IR35 Related Thread
- Thread starter NVP
- Start date
Don
Yes, and if that is the case it was a sham from day 1!
Man of Honour
Must have been a blast being a contractor 20 years ago 
My dad's been going strong as a COBOL dev for the last 40+ years - he's not sure what to do now as they're telling him to go via an agency.Must have been a blast being a contractor 20 years ago
That is irrelevant. And again part of the issue.
Don
It is relevant, the contractors day rate isn’t what they receive as the employee!
Of course not. Because you're not a sole trader. You work for a limited company you happen to be a director/share holder of.
I'm really not starting an argument. I get it all. I was a contractor and enjoyed it. I also pull into my drive and see the rewards of massive obscene rate of the 2000s. I feel very fortunate to work in an industry that continues to pay well.
But to make any sensible case against ir35, people can't bleed on about lack of holidays and pension etc that they don't get so they should "pay less tax". You should be compensated/earn more due to the inherit risk, but paying less tax is not the mechanism to do that.
It's flipping moronic.
Man of Honour
Yeah, that's my plan eventually to set up an LLP with other consultants and go in business that way rather than operate as an individual. A lot more scope for growth as well
*like*
There is. If I get the time I'll try and succinctly describe some of the issues we had at the time. Rules and company structure, and trust, were a challenge though. But it worked. For a while.
Man of Honour
Please do, that would be very interesting to read
Trust is the one reason I've not looked in to further than I have at this point. Not something you'd want to set up with someone you got on with for a couple of months at a previous client
Don
Ah I get you - I see the paid holidays/pension issue one for my business to finance - I get both as a consequence.
The irony is with PAYE that people are now being told they’re not legitimately self-employed, but won’t get employee rights.
Soldato
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- 19 Oct 2008
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I can agree with you but that's ignoring the commuting costs, overnight stays, time spent travelling. It's still a business contractors run, providing a service to clients often miles away from where they live. While some contractors are like perms and want lengthy notice periods, hang onto a client until the end (even if bored out of their brains), many are not. Tax discussion aside, I've worked with and been someone who has lived in a nicer part of the country and commuted away. That door has now closed. Paying £70 or so a night for a hotel while paying tax like an employee is just not economical to do anymore.
In the failing UK.com world, I'm sure the government wants everyone working for a large organisation paying tax as good little employees. It wouldn't be so bad if the rules were fairly applied but they're not. Even the public sector can decide on an individual basis whether someone is inside or outside if they really want to. I was helping out at a place recently that did exactly that and even tried to get one person extended outside because they wanted to retain them (when everyone else were inside IR35). Very senior management put a stop to it however stating ALL contractors must be inside IR35 (so much for using the evaulation tool).
Unfortunatley it's just a tax grab and contractors are now an easy target. However, I'm already hearing about more outsourcing. A friend for example is working with a client (on and off for years) and they've basically brought back online their software development team in Easter Europe due to it.
Previously I've accepted short contracts, zero day notice periods and commuted/stayed away for the good contracts. I've never had a desire to be like an employee. I wanted to be a flexible freelancer, a role many permanent staff would never do. . Imagine starting a 2 month contract in April and not working for the rest of the year. Eventually that tax refund will come but they should be able to manage this themselves. Freelancers can have a few contracts a year and if hit the market at the wrong time can be without work for quite a while. Nothing like being 'an employee' at all, especially considering all of the lack of benefits too.
Thankfully this is now happening at end of my time in IT but I feel sorry for companies too who use contractors and it's sad for the good contractors (not the permitractors
). Many probably won't pay enough to get the best talent who may not be local and may end up stuck with inflexible permanent staff and unable to get rid of them easily. Or, outsource(on-shore or offshore). The flexible freelancer being able to provide a fairly cost effective service to many orgs is ending.
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Soldato
Companies will get a rude awakening after the 31st December were we officially leave the eu with whatever crap agreement we getI can agree with you but that's ignoring the commuting costs, overnight stays, time spent travelling. It's still a business contractors run, providing a service to clients often miles away from where they live. While some contractors are like perms and want lengthy notice periods, hang onto a client until the end (even if bored out of their brains), many are not. Tax discussion aside, I've worked with and been someone who has lived in a nicer part of the country and commuted away. That door has now closed. Paying £70 or so a night for a hotel while paying tax like an employee is just not economical to do anymore.
In the failing UK.com world, I'm sure the government wants everyone working for a large organisation paying tax as good little employees. It wouldn't be so bad if the rules were fairly applied but they're not. Even the public sector can decide on an individual basis whether someone is inside or outside if they really want to. I was helping out at a place recently that did exactly that and even tried to get one person extended outside because they wanted to retain them (when everyone else were inside IR35). Very senior management put a stop to it however stating ALL contractors must be inside IR35 (so much for using the evaulation tool).
Unfortunatley it's just a tax grab and contractors are now an easy target. However, I'm already hearing about more outsourcing. A friend for example is working with a client (on and off for years) and they've basically brought back online their software development team in Easter Europe due to it.
Previously I've accepted short contracts, zero day notice periods and commuted/stayed away for the good contracts. I've never had a desire to be like an employee. I wanted to be a flexible freelancer, a role many permanent staff would never do. . Imagine starting a 2 month contract in April and not working for the rest of the year. Eventually that tax refund will come but they should be able to manage this themselves. Freelancers can have a few contracts a year and if hit the market at the wrong time can be without work for quite a while. Nothing like being 'an employee' at all, especially considering all of the lack of benefits too.
Thankfully this is now happening at end of my time in IT but I feel sorry for companies too who use contractors and it's sad for the good contractors (not the permitractors
I've been out of the contract game for a number of years, but based on my calculators (I think div rates and corp tax have not changed):
£650/day = £164,450 gross (based on 253 working days)
Corp Tax = £32,890
Net Dividends = £131,560.
Div tax:
7.5% = £2,138
32.5% = £31,869
Total = £34,007
Take Home = £97,553 (or £8,129/month).
The biggest tax advantage to Ltd PSCs (which IR35 seeks to eradicate) is that you dont pay income tax + NI rates. Plus, you have the flexibility to control your income (and therefore how much tax you pay) each year. So if you know you'll be taking a year off, you can spread your income over the 2 year period, instead of taking it all in a single year.
None of this is wrong. It's how every small business in the country operates. IR35 has always been so difficult to enforce because they dont want to impact what they deem "legitimate" small businesses - but the definition is so arbitrary, they've seldom been successful in court arguing it. Don't get me started on the shambles which is CEST....
See my previous post. It is precisely the point.
If they want everyone to pay PAYE rates, then they should just do that. Every plumber, electrician, shop ..... all should pay PAYE rates. But you'd stifle business and entrepreneurialism. It'd be cutting your nose to spite your face - the net result is less income for the treasury. They'll realise soon enough with the IR35 reforms.
That’s assuming no days off right, sure I used to work around 220 ish days a year? And I was referring to £6600 take home on a £500 a day contract.
So i've read a fair bit of this thread and do have experience with IT contractors as i work in IT myself and we've had many come and go for various projects etc. (I'm a permanent IT guy who doesn't particularly like change so fair play to the contractors out there who get lots of change! Haha!)
To me it looks like this:
Problem - Companies were hiding staff by using contractors to lower their bills/tax/etc
Answer - Change the way contractors work and how they are taxed?!?!
That looks like someone has answered a question with an answer meant for another question...
Why couldn't they just do something to get the companies to sort their **** out and actually say who's working for them, what they are doing and what their status is? This just seems pretty backwards.. (This is coming from someone who's never really been particularly wowed by most contractors skills BUT can appreciate the cut throat, uncertain job life they can lead. And why them making a bit more than permies doesn't bother me too much as i know i couldn't do it from an uncertainty level so fair play to them. Some rates I've seen are mental though..)
To me it looks like this:
Problem - Companies were hiding staff by using contractors to lower their bills/tax/etc
Answer - Change the way contractors work and how they are taxed?!?!
That looks like someone has answered a question with an answer meant for another question...
Why couldn't they just do something to get the companies to sort their **** out and actually say who's working for them, what they are doing and what their status is? This just seems pretty backwards.. (This is coming from someone who's never really been particularly wowed by most contractors skills BUT can appreciate the cut throat, uncertain job life they can lead. And why them making a bit more than permies doesn't bother me too much as i know i couldn't do it from an uncertainty level so fair play to them. Some rates I've seen are mental though..)