IR35 stays...

[VectraMan]

That rule is not about how we pay tax, it's an imposition on how we choose to work.

How?

[pastalista]

I never understand why people protest that contracting only exists because of the way we can avoid some tax. I did my first contract with an umbrella, and I was still able to more or less double my take home pay over my previous permanent job. Sure it changes the calculation when balancing one against the other, but claiming that paying the same rate of tax as an employee would kill contracting sounds like somebody throwing their toys out of the pram.

Obviously I'm not in favour of IR35, but contracting isn't just about that last 10% of income. I'd probably still be a contractor if I'd had no choice but to pay employee levels of tax.

Why?

If there was no differential between the pay we received or the percentage of tax we paid and the pay an employee received or the level at which they were taxed, why would you want to contract with all its inherent pitfalls (time on the bench, no holiday pay, no sick pay and so on)?

If variety is the name of the game then you could always move jobs every year or two and you would score the advantage that most employers are happy to wait a few weeks to allow for notice periods, as opposed to contracting where you normally have to be immediately available.

I've been a contractor for 28 years and I love being one, but if they made me pay PAYE levels of tax, unless the rates doubled to compensate, I'd leg it back to permiedom immediately.

I'm just intrigued by your statement, rather than saying you're wrong by the way.

Pastalista

[SorenLorensen]

How?

Because freedom, flexibility and personal choice will be financially penalised. Those who work 6 months of the year for a client, then want 6 months off - penalised. Those who work for one client long-term, adding value to that client - penalised. Someone who works a 9 month contract, but then finds themselves benched for the remaining three months - penalised. Such a ruling would hurt the end-clients, who would find themselves having a large turnover of contractors due to this, and losing long-term expertise and knowledge. This is absolutely NOT what the flexible workforce is about.

[VectraMan]

If there was no differential between the pay we received or the percentage of tax we paid and the pay an employee received or the level at which they were taxed, why would you want to contract with all its inherent pitfalls (time on the bench, no holiday pay, no sick pay and so on)?

Of course not. But the point I was making was about tax, not about pay. If contracting is equivalent to double the salary, even paying the same amount of tax as somebody on double the salary as a permie still means you're much better off and have the other advantages. Would an employee refuse a 100% pay rise because of the extra tax?

[VectraMan]

Those who work 6 months of the year for a client, then want 6 months off - penalised. Those who work for one client long-term, adding value to that client - penalised. Someone who works a 9 month contract, but then finds themselves benched for the remaining three months - penalised.

Penalised how exactly? None of those examples would result in any extra penalty over somebody who did the same as an employee, or via an umbrella.

[TykeMerc]

No, it's somewhat low. There are 4.7 million people in the country who work for themselves (including some who own fairly substantial companies of course). The 1.4 million are those we would recognise as one-man bands or similar nano businesses. The numbers, along with a measure of how much they contribute to GDP each year (which was a lot) were provided by independent researchers from a university business school, and are almost certainly reliable.

Ok.....

Just to take my personal and recent experience how many of those 1.4 million are likely to be subject to IR35 or even heard of the PCG?

I'm having some house repairs done.
Joiner, plasterer, gas man, plumber, electrician and roofing bloke, all 1 man band building trades people.
Medical.
Dermatologist - Freelance consultant, works for the NHS and BUPA
Dentist - Private only, his wife is his only employee
Family
Sister - Freelance seamstress
Parent - Freelance medical practitioner

Counting myself that's 11 people, all separate 1 person trading entities that only employ spouses other than themselves yet I'm the only one who's ever heard of IR35.

I've not mentioned the other people I know who operate as 1 man band companies which include a car body specialist who's on contract to 1 large insurance company and has been for 5 years, a dozen other building trades people some of whom contract for long periods to large building firms, 2 locum doctors, several solicitors and accountants, supply teachers and a couple of freelance university lecturers.

[malvolio]

Ok.....

Just to take my personal and recent experience how many of those 1.4 million are likely to be subject to IR35 or even heard of the PCG?

I'm having some house repairs done.
Joiner, plasterer, gas man, plumber, electrician and roofing bloke, all 1 man band building trades people.
Medical.
Dermatologist - Freelance consultant, works for the NHS and BUPA
Dentist - Private only, his wife is his only employee
Family
Sister - Freelance seamstress
Parent - Freelance medical practitioner

Counting myself that's 11 people, all separate 1 person trading entities that only employ spouses other than themselves yet I'm the only one who's ever heard of IR35.

I've not mentioned the other people I know who operate as 1 man band companies which include a car body specialist who's on contract to 1 large insurance company and has been for 5 years, a dozen other building trades people some of whom contract for long periods to large building firms, 2 locum doctors, several solicitors and accountants, supply teachers and a couple of freelance university lecturers.

Really not been paying attention, have you? They haven't heard of IR35 because they aren't in its firing line (although the building trades guys are facing up to CIS which has the same basic remit as IR35 except that 95% of them haven't noticed yet). And having seen a few medical "temporary contracts" they actually are very close to the current IR35 boundary; many will fail on both MoO and D&C

The correct question is why do a few trades in the knowledge sector have to prove they are operating in exactly the same way.

[TykeMerc]

The point I was making is that while there may well be 1.4 million "contractors" the vast majority wouldn't have any interest in the PCG...

I've never agreed with IR35's existence as many other people who work in a remarkably similar way to me for a relatively small client base aren't subject to the IR35 malarkey.
For that matter a fair chunk of my workload isn't in any way connected with IT beyond the fact most people have PC's, so why should I as a commercial Project Manager have anything more to do with it than say an accountant, lawyer, facilities engineer, safety consultant or medic on contract to the same client?

[malvolio]

The point I was making is that while there may well be 1.4 million "contractors" the vast majority wouldn't have any interest in the PCG...

I've never agreed with IR35's existence as many other people who work in a remarkably similar way to me for a relatively small client base aren't subject to the IR35 malarkey.
For that matter a fair chunk of my workload isn't in any way connected with IT beyond the fact most people have PC's, so why should I as a commercial Project Manager have anything more to do with it than say an accountant, lawyer, facilities engineer, safety consultant or medic on contract to the same client?

I don't know, Nor does anyone else apart from Dim Prawn and that absentee idiot Brown. Which is rather the whole point, isn't it?

BTW, has we lost the IR35 battle, or even not kicked up about it in the first place, NL would almost certainly now be taxing all your sample population as employees of someone. Think on...

[SorenLorensen]

Penalised how exactly? None of those examples would result in any extra penalty over somebody who did the same as an employee, or via an umbrella.

Penalised in the fact that they would be paying much more in tax than someone doing the exact same thing, but who has more than one client in an 80/20 split. This would mean that contractor businesses could not do any forward planning, as they would not know their tax status for the forthcoming year.