Will contract rates increase to pass dividend tax increase to clients?

[VillageContractor]

Rates will only ever go up if
a) The work cannot be outsourced
and
b) There are not enough permies
and
c) There are not enough contractors
and
d) The work must be done

If the contractors who will not be able to swallow this tax go back to permiedom then we're left with option c.

[northernladuk]

If the contractors who will not be able to swallow this tax go back to permiedom then we're left with option c.

You know how much we are talking here right??? And option C? With the offshore options? That isn't going to happen. It's a lovely thought so we can get back to being proper contractors but still, not going to happen.

[kaiser78]

The dividend tax level is is not a huge amount in the overall scheme of things, not life changing for most of us contractors I imagine.
It has to be paid so we all need to just grin and bear it...

[LondonManc]

At a time when contracts are harder to come by, do you want to price yourself out of the market? Feel free if your business model is diva and you have the warchest to back up that plan but I'll be simply taking the extension that's currently going through and be grateful if I dodge a rate cut.

[pr1]

The dividend tax level is is not a huge amount in the overall scheme of things

yet

[northernladuk]

yet

and?

[jamesbrown]

yet

What is a "huge amount" in the context of applying full PAYE and NI through a Ltd or being a sole trader? It wouldn't have to go much further to eliminate the difference entirely. There's a limit to how far they can push the dividend tax. It's a very poor mechanism through which to eliminate tax-motivated incorporation (given the wider use of dividends). On the contrary, this was mainly intended as a source of revenue, with the distributional impacts on particular taxpayers (us) as a secondary benefit. It may go somewhat further, but it cannot go substantially further.

[NibblyPig]

Depends if contractors are leaving the contracting business, or contractors are turning down lower paying roles.

Plus don't forget T&S changes that may make contractors turn down roles further afield which reduces supply and drives prices up.

All speculation though. Will have to wait and see.

[Bluenose]

That's a polite way of putting it

SJD sent emails out this morning....

In answer to the OP: Yes I will be increasing, by 8%.

[LondonManc]

What is a "huge amount" in the context of applying full PAYE and NI through a Ltd or being a sole trader? It wouldn't have to go much further to eliminate the difference entirely. There's a limit to how far they can push the dividend tax. It's a very poor mechanism through which to eliminate tax-motivated incorporation (given the wider use of dividends). On the contrary, this was mainly intended as a source of revenue, with the distributional impacts on particular taxpayers (us) as a secondary benefit. It may go somewhat further, but it cannot go substantially further.

+1

It will be a sad day when perm jobs look more attractive.