Inside IR35 PS calculation

[doconline]

28% increase? I wish someone could explain to me how these tax changes are going to result in additional funds for the government?

Sounds to me like they will be worse off overall. I wonder if someone crunched the numbers on these changes

It's just rinsing the same money to begin with isn't it? PS pays contractor x+30%. Contractor then pays HMRC tax amount+increase due to being inside IR35. HMRC then pays out budget increase to PS to pay for contractor. Contractor hopefully doesn't lose out, HMRC says this is a triumph as tax income has increased.

IR35 is rolled out to private sector. Private sector won't pay increased rates. PS rates come down to match private sector now. HMRC wins in the short term as tax revenues are still up. Contractors all lose out and move abroad. Accenture and other big consultancies come in charging much higher rates but don't pay Corpotration tax. HMRC lose tax revenue. UK closes.

[barrydidit]

Even driving too. I used to do 105 miles a day. Thats almost £1000 at 45p a mile (until it goes down). So thats a few extra quid in tax on that again.

No it isn't, it's £47.25.

It's almost £1000 a month, at 45p a mile.

[fannyadams]

No it isn't, it's £47.25.

It's almost £1000 a month, at 45p a mile.

And only for the first 92 days of the contract. After that it's 25p a mile, or £26.25 a day.

[TheFaQQer]

And only for the first 92 days of the contract. After that it's 25p a mile, or £26.25 a day.

95 days, surely?

[psychocandy]

I can see the headline already:

" Public Sector paying contractors' taxes for them to avoid new economy rules"...

Yes its nuts. Public sector cant do without the contractors so has no choice but to increase the rate. So it costs them loads more. Contractor ends up pretty much the same.

In this case, for some reason, the client answered the question about fixing things at own expense wrongly. i.e they'd pay.

I think this is going to happen a lot. When PS clients realise that its costing them loads more they might a bit more careful with the IR35 test.

[northernladuk]

I think this is going to happen a lot. When PS clients realise that its costing them loads more they might a bit more careful with the IR35 test.

But when HMRC come knocking and give the clients some examples it could put the fear of god in to them they may go the other way.

Interesting you mention fixing errors though. So a Dev does some work, goes to test and it fails. Should that dev be fixing that in his own time? Would the client be wrong to tick the box saying they pay for errors fixing?

[fannyadams]

95 days, surely?

95.2 days. Glad you're paying attention.

[barrydidit]

No it isn't, it's £47.25.

It's almost £1000 a month, at 45p a mile.

And only for the first 92 days of the contract. After that it's 25p a mile, or £26.25 a day.

95 days, surely?

95.2 days. Glad you're paying attention.

This is NLUK's rule of CUK maths arguments being demonstrated

[northernladuk]

This is NLUK's rule of CUK maths arguments being demonstrated

Shhhh, I'm enjoying this.

[TheFaQQer]

95.2 days. Glad you're paying attention.

Indeed. 25 miles into the journey on day 96, the rate changes for the next 80 miles that day and for the rest of the year.