How much rate rise to cover no expensese after 2 year rule kicks in?

[NickNick]

Has anyone EVER managed to get client to agree to this based on contractor explaining the 24 month rule to them?

Can just see it.

Contractor: Thing is for 2 years I've managed not to pay tax on all my travelling costs and saved myself couple of £100 a month in tax.

Client: You mean travel to work like us permies pay for out our net salary? That must be nice for you.

Contractor: Yes. Thing is I want £x per day to cover this or I'll be worse off.

Client: So you've been here 2 years, getting x times more than the permies, you've been milking the tax system, and now its over you want us to pay more?

Contractor: Yes please.

(BTW. Not saying I agree with this conversation but this is how client may think rightly or wrongly. 90% IMHO seem to think the start rate is the rate forever).

I did it at a client site when I was approaching 2 years and they asked if I'd be interested in staying on beyond that. I explained about the 2 years rule and how my current expenses were around 50 a day which is the hit I was going to take if I took the extension. (I knew that it was actually ony the tax saving on that I was going to get hit with) and they wanted me to stay so we agreed on £44 extra a day on the rate.

[d000hg]

Has anyone EVER managed to get client to agree to this based on contractor explaining the 24 month rule to them?

Can just see it.

Contractor: Thing is for 2 years I've managed not to pay tax on all my travelling costs and saved myself couple of £100 a month in tax.

Client: You mean travel to work like us permies pay for out our net salary? That must be nice for you.

Contractor: Yes. Thing is I want £x per day to cover this or I'll be worse off.

Client: So you've been here 2 years, getting x times more than the permies, you've been milking the tax system, and now its over you want us to pay more?

Contractor: Yes please.

(BTW. Not saying I agree with this conversation but this is how client may think rightly or wrongly. 90% IMHO seem to think the start rate is the rate forever).

Why do you need to tell them your life story. "My costs have gone up, so I need to charge you more"

[Sausage Surprise]

Why not ask to work 2 days on site, 3 days at home. Then the 24 month rule doesn't apply.

Can't access the apps that I test from home, so that's a non starter unfortunately.

[BolshieBastard]

Currently claim around £1000 a month for accommodation, mileage and subsistence.
When this all stops after the 2 year rule kicks in, how much extra per month would you need to cover it with a rate rise?


Edit: Bollocks - typo in header!

Hahahaha! You think the client never mind the agent is concerned about your expenses!?

You might get a 100 quid a week if you're plucky enough.

[SpontaneousOrder]

Complaining about the 24 month rule is like complaining over the bedroom tax; you're not losing out, you're just winning slightly less than you used to. You're still on top.

Depends on how you define 'winning'. It's not some lucky windfall - it's a business expense. As soon as it stops being a business expense, you're losing.

[SpontaneousOrder]

True, it has to be "grossed up".

Meanwhile, the company profit increases by £1000 a month, so corporation tax goes up by £200. Your company is worse off by £200 and you are worse off by £666. (all other things assumed equal)

So is the answer 886/20 = £44.30 ?

No. If you're already a higher rate tax payer, then profit goes up by £1000. CT = £200 leaving £800. That £800 taken as dividend is taxed at an effective 25% leaving £600.

600 is 400 less than 1000.
400 / 20 days = £20 per day.

[TheFaQQer]

No. If you're already a higher rate tax payer, then profit goes up by £1000. CT = £200 leaving £800. That £800 taken as dividend is taxed at an effective 25% leaving £600.

600 is 400 less than 1000.
400 / 20 days = £20 per day.

You need £1000 out as a dividend to pay the expenses, not £800.

[SpontaneousOrder]

You need £1000 out as a dividend to pay the expenses, not £800.

good point.

[SpontaneousOrder]

You need £1000 out as a dividend to pay the expenses, not £800.

Does that make £22.50 then? £200 CT plus £250 on the divi of £1k ? / 20 days.

That's assuming you don't already take out 100% so there is a full 1k to take out as divi.

[rob s]

"I was giving you a discounted B2B rate for the first 2 years because the government lets me pay reduced tax."