OTS recommended changes to IR35

[malvolio]

PCG will survive. There are plenty of things to stuff up freelance contractors even if IR35 becomes a vague memory, and we will still need representation within HMG.

[krytonsheep]

I'd be happy if they merged all 3, PAYE + employers/employees NI. Why should employers be taxed for employing someone?? Really it's just a disguised way of taking more tax off the employee. I do my own accounts/payroll and all 3 taxes are effectively treated as one tax by the government already. You pay the three taxes as a single bank transfer to a single account.

[swamp]

I'd be happy if they merged all 3, PAYE + employers/employees NI. Why should employers be taxed for employing someone?? Really it's just a disguised way of taking more tax off the employee. I do my own accounts/payroll and all 3 taxes are effectively treated as one tax by the government already. You pay the three taxes as a single bank transfer to a single account.

Everyone with a brain would agree with you, but there are many without one who would be flapping their arms about if they removed Employers' NI. There are many thick people out there. I think HMG should rename it and gradually reduce it, but they should draw attention to Employers' NI so people know their pay cheque is being skimmed before it even gets to them.

[VectraMan]

There are too many problems involved in getting rid of Employers' NI. The man in the street is too stupid to realise that he pays it already, and if you say everybody gets an effective rise in gross pay to offset the NI being moved to be part of income tax, that creates all sorts of problems about comparisons of salary (imagine all the changes to pay grades, minimum wage legislation, student loan thresholds, union contracts...). It'll never happen.

A new tax rate on dividends that makes it the same as paying NI would be far simpler and very simple to implement. Better yet if you could opt out of CT and PAYE, and just pay the one "small Ltd. company owner" tax. This would still be better than IR35 as you'd only pay tax on the amount you earned; you'd still be able to let profits accumulate in the company.

[Jog On]

So could this mean a boom for umbrella companies?

[SueEllen]

So could this mean a boom for umbrella companies?

People who are use to calculating their own expenses and doing a bit of tax work will continue to work that way, there as those who haven't probably won't start. And that includes people crossing the perm to freelancer divide who have had to do SA or complete other tax forms.

I know from people in other countries a lot of them use a book keeper rather than an accountant. So it would be the accountants who specialise in small businesses who would lose out.