IR35 'to be reviewed'

[neil99]

More bad news:

The government recognises that many individuals choose to work through their own limited company. However, where people would have been employees if they were providing their services directly, anti-avoidance legislation commonly known as IR35 introduced in 2000 requires that they pay broadly the same tax and National Insurance as other employees. As highlighted by reports from the Office of Tax Simplification and the House of Lords, it is clear that IR35 is not effective enough. Non-compliance in this area is estimated to cost over £400 million a year.

[northernladuk]

They say the same every year and it often fails spectacularly. Not really news and not necessarily that bad. Lets wait for the details first.

[FarmerPalmer]

There will be no need with the new Dividend Tax, it makes incorporation less tax efficient than it once was.
Taking under the 40% limit marginally better off, as you go over it you get worse off taking dividends.

[griffin]

Agreed.

The new dividend tax means you will pay 7.5% on dividends after the first £5000. IR35 will hopefully now be scrapped, we will be worse off but better than caught IR35

From the budget

1.187 Combined with the increases the government has made to the personal allowance and
the introduction of the Personal Savings Allowance, from April 2016 individuals will be able
to receive up to £17,000 of income per annum tax-free, and separately invest up to
£15,240 per annum through an ISA tax-free.

1.188 The government will set the dividend tax rates at 7.5% for basic rate taxpayers,
32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.

[ChimpMaster]

So 7.5% tax where there was none before?

At least we have until April 2016. I should be done with contracting by then

[TheFaQQer]

They say the same every year and it often fails spectacularly. Not really news and not necessarily that bad. Lets wait for the details first.

It's the paragraph that comes after that which is the one to pay attention to:

"The government has asked HMRC to start a dialogue with business on how to improve the effectiveness of existing IR35 legislation. The government wants to find a solution that protects the Exchequer and improves fairness in the system."

Whatever is coming, it's not going to be good for us.

[northernladuk]

It's the paragraph that comes after that which is the one to pay attention to:

"The government has asked HMRC to start a dialogue with business on how to improve the effectiveness of existing IR35 legislation. The government wants to find a solution that protects the Exchequer and improves fairness in the system."

Whatever is coming, it's not going to be good for us.

Agreed. I think I said many moons ago when they first talked about reforming IR35 it would be bad for us. The system at the moment maybe a load of crap but it's so complex and unenforceable I would have been happy to keep it over something that works. Any reform or steps to get it right isn't going to go well for us. In a fair world it will be so good it will catch the 90%+ bum on seats, don't know what IR35 is contractors and leave the rest of us alone. Sadly I expect it will be sledgehammer that will lump us all in to the same boat.

Let's carry on waiting to see.

[Wijay@WISAccountancy]

It's the paragraph that comes after that which is the one to pay attention to:

"The government has asked HMRC to start a dialogue with business on how to improve the effectiveness of existing IR35 legislation. The government wants to find a solution that protects the Exchequer and improves fairness in the system."

Whatever is coming, it's not going to be good for us.

Does this mean HMRC starts dialog with "Contractor" business or with Top 4 accounting firms. Top 4 are really pushing for restrictions on PSC. Greedy to share the fee income by small firms like us. Its like TESCO opening next to local corner shop....

[unixman]

It's the paragraph that comes after that which is the one to pay attention to:

"The government has asked HMRC to start a dialogue with business on how to improve the effectiveness of existing IR35 legislation. The government wants to find a solution that protects the Exchequer and improves fairness in the system."

Whatever is coming, it's not going to be good for us.

This just seems like repeating what they said in 2010 onwards. Look on the bright side. Improving fairness might mean squashing the (largely) public sector permies pretending to be contractors (where they sit at the same desk for 10 years, in the same job, live within 10 miles and never change), while allowing us Travelodge roaches to continue our short term, temporary, itinerant lives. i never like being tarred with the same brush as that lot anyway.

[Zero Liability]

Presumably they mean the end users. Methinks it's a subtle way of forcing the FLC through. The change to how dividends are taxed alone will erode a lot of the already fancifully high amount the legislation 'protects'.