Liz Truss &IR35

[northernladuk]

If it's in the agency to contractor contract but not the agency to end client contract then it's a lie. That would be something you would want confirmed early on...

Yep but nobody ever did in the past so interesting to see if clients are more in the know and actually tell the agency going forward.

[Cookielove]

Now that KK has been punted what’s going to happen re his IR35 plans?? Will they stand or is Hunt going to try and drop this ?? Like he is scrapping the CT change etc. Cannot stand Hunt by the way ....

[eek]

Now that KK has been punted what’s going to happen re his IR35 plans?? Will they stand or is Hunt going to try and drop this ?? Like he is scrapping the CT change etc. Cannot stand Hunt by the way ....

No one knows - we need to wait to the 31st

however with corporation tax at 25% the actual cost of returning to the old rules will less than what was estimated in the mini budget.

and the current scheme simply isn’t working

[Cookielove]

Let’s hope it stands...!

[jamesbrown]

Oh, I think it's gone. It's easier to reverse (the reversal) than some of the other measures because it's very niche, doesn't require any legislative changes or arguing about and it benefits the accounts by £2B, which is a non-trivial amount (the estimate may be a clownshoe, but it's the estimate that matters when trying to align with the OBR).

[jamesbrown]

however with corporation tax at 25% the actual cost of returning to the old rules will less than what was estimated in the mini budget.

Give it a couple of years and I can reasonably confidently predict that IR35 will be moot as an "avoidance strategy" because dividend taxes will be whacked up to match income taxes. With CT at 25% you've covered ErNi plus EeNi. In other words, there will be no tax advantage of incorporation and a significant disadvantage when compared to self-employment, not that self-employment is an option for most contractors.

[Cookielove]

Nothing has been announced or mentioned though? That’s just your hunch saying it has gone?

[malvolio]

Nothing has been announced or mentioned though? That’s just your hunch saying it has gone?

Who knows. Although Hunt should know all about IR35 - for one thing he has been told in detail why it's not working, and when in Health he would have known that IR35 with no expenses allowable (and taxation/pensions) are at the heart of the shortage of good locums to help the staffing levels...

[jamesbrown]

Nothing has been announced or mentioned though? That’s just your hunch saying it has gone?

Correct, it is nothing more than that. But it has been alluded to in the press and, when you think about the costs/benefits of reversing it, I think the answer is pretty clear. The main issue from a whole-of-gov't perspective is the liability that has arisen across gov't departments (public sector implementation), but I don't think HMRC or the Treasury really care about that and the extension to the private sector greatly helps with aggregating many contractors together (just like the MSC legislation). It is a hunch, I could be wrong, but I will be surprised if they don't freeze the reversal. That is to say, I was stunned when they announced it.

[gixxer2021]

Give it a couple of years and I can reasonably confidently predict that IR35 will be moot as an "avoidance strategy" because dividend taxes will be whacked up to match income taxes. With CT at 25% you've covered ErNi plus EeNi. In other words, there will be no tax advantage of incorporation and a significant disadvantage when compared to self-employment, not that self-employment is an option for most contractors.

Agree, but there will still be the ability to tax plan and pay out what you want when you want (if you don’t need all the money), which you can’t when working inside (like you say most of us can’t work as self employed). I’m also worried the MSC legislation will be even more damaging than IR35 (but that’s another story).