Ipse Welcomes - government “historic lifeline to contractors”

[Bluebird]

It may be the smallest violin in the world but it's justification for binning the IR35 reforms once and for all. Yes we pay less tax but we also get and got zero support when it is and was given to absolutely everyone else...

Yes, and for me this is key.

If dividends are a return on investment, then they are NOT salary income and therefore subject to the same rules as salary.

[Glencky]

Yup, that's pretty unfair. You have my sympathies.

Thanks!

I'm just very lucky that I had prepared for a few months off. And even more, I'd prepared for a few months off that I wanted to be able to enjoy i.e. travel, spend money, that sort of thing. And I'd prepared for that against the backdrop of expecting I might find it harder to get back into work afterwards due to IR35 changes. My point is, entirely by coincidence I'd prepared for a chunk of time off in a way that leaves me more financially resilient - for 6 months or so - than I would otherwise have been.

If this had happened 18 months ago, I'd have just come off 6 months out due to having been forced to bench myself for health reasons. I'd have been in a very different financial position* with absolutely no support from the government.



*although still much less vulnerable than many people, particularly given equity in house, etc.

[wattaj]

...although still much less vulnerable than many people, particularly given equity in house, etc.

OT, but I don't think that any of us can bank on equity retained in the house anymore. Changed days for the foreseeable future.

Good luck though. Good luck to all.

[GhostofTarbera]

Interesting thread, and thanks for the link to Twitter. The argument laid out by IPSE does make sense in terms of the position they have taken.

I thought some of you might be darkly amused and/or even smug to consider my own circumstances..!

I have chosen to operate inside IR35 since I started contracting c.7 years ago, broadly for ethical reasons, and secondarily with a strong eye on the IR35 changes that even when I set up, I guessed were to come (the only thing that has surprised me is that they weren't implemented sooner - at least, in the private sector).

As of a month ago, I was frustrated by the volatility in the contracting market caused by the then-upcoming changes, and also frustrated by the likelihood of being 'forced' to work through an umbrella and losing all the flexibility I have always had running my own business even though I was running inside IR35. But that was the extent of the disruption for me. I built up my savings buffer and aimed to get an inside contract in due course. Current contract ends early April and I was planning a few months off over the summer (chunks of time off being one of the main reasons I contract) and then look for something after that. For me there was even the chance I might get an outside IR35 role which would ironically have put me in a better place financially to where I'd been operating. But if not, loss of flexibility and increase in hassle from umbrella company, but not a massive financial hit (loss of flexibility on pensions being the main down side for me).

Obviously with COVID much has changed. The first thing was that I have been offered - and accepted, because who wants big chunks of time off whilst stuck inside! - a short extension partly as a result of it. That's good, as it'll get me some income in the new financial year, which is of disproportionate benefit to me.

But now when I look at the situation based on the support packages rolled out by the government, just like everyone who has deemed their contracts outside IR35 for the last years, I cannot take advantage of the '80% of employment income' package by furloughing myself, and I am not self employed so can't take advantage of that anyway. But even if I did, due to operating inside IR35, my company has had less than £10k profit left in it every year (because operating inside IR35 you naturally take all the profits out as salary) so if I got 80% of something it would be far below the £2.5k cap!

In other words, I have behaved at all times the way HMRC apparently 'wanted' me to. I have assessed my contracts as inside IR35, operated inside IR35 and made most of my turnover as salary. And now that this has happened, I am neither given the assistance provided to self employed people, nor to the employed.

Or at least, that's how I'm understanding it. I have to admit I haven't gone into this in great detail because I'm not intending to try and claim anything.

I appreciate I'm in the minority but I know there are others in my situation - around 5-10% I've always guesstimated based on the very unscientific method of 'what I've gleaned from other contractors I've worked with'.

If you want to talk about 'unfair' then that's it!

However, it's a 'smallest violin in the world playing just for me' type situation. The reason I'm not attempting to claim anything is because I'm hyper aware that I'm in a much, much better situation than the vast majority of the UK public at this time.

Thoughts and prayers

More like 0.5%-1%




Sent from my iPhone using Contractor UK Forum

[Glencky]

OT, but I don't think that any of us can bank on equity retained in the house anymore. Changed days for the foreseeable future.

Good luck though. Good luck to all.

Yes, agree with you on house prices. We're already in a very changed world, and it's going to be a very different place when (if) we all get through this.

[BrilloPad]

OT, but I don't think that any of us can bank on equity retained in the house anymore.

It is far better for society as a whole - especially young. Oldies have had their own way for too long.

Hopefully house prices will stay the same during the hyper inflation to come.

[CheeseSlice]

And here is the truth:

3. This is the big one. If Ltd Co contractors had been included in the package we would have lost the IR35 argument FOREVER. If you don't believe me look at what the Chancellor said about sole trader national insurance rates the announcement

You are either running a business or you are not.

And before anyone gets on their high horse, I started my Consultancy as a Limited Company on 3rd March. I understand and accept the risks and rewards of running a business.

Me too, and being highly risk averse I made the choice to build a large enough warchest to survive this, but not forever. I've had years to prepare, and not everyone is in the same boat and will be hard hit by this.

Its interesting when you think about what has just happened. I don't see our situation as normal 'risks of running a business'.

The government has effectively halted the normal functioning of our economy in response to the crisis. This has never happened before in living memory.
They are very afraid of this creating a deep recession, a liquidity trap and deflation which will be disastrous and difficult to get out of. They have decided to mitigate from the damage the intervention is already creating by creating liquidity, protecting jobs, protecting businesses. They've effectively bailed out or nationalised large portions of the economy and are putting the income tax system into reverse to stave off mass unemployment, loan defaults, etc.

This is an intervention that nobody has seen before, and nobody outside of government and BoE has any control over. Normal market forces certainly didn't bring this on, and they wont bring us out of it without first switching off the restrictions (shutting down shops, limiting movement, etc) that have halted the normal economy.

Much larger businesses than ours are not having to accept the full risk of this intervention. Instead of laying off employees, they're able to retain some of them through the governments coronavirus mitigation package. Thinking longer term, if these restrictions carry on (e.g. 1-2 years), then many of us, no matter how large a warchest you have will ultimately be wiped out. So why shouldn't PSC contractors be eligible for protection also?

[pvfcpug]

Maybe some glimmer of hope:

https://twitter.com/MartinSLewis/sta...95600433356804

[Glencky]

Me too, and being highly risk averse I made the choice to build a large enough warchest to survive this, but not forever. I've had years to prepare, and not everyone is in the same boat and will be hard hit by this.

Its interesting when you think about what has just happened. I don't see our situation as normal 'risks of running a business'.

The government has effectively halted the normal functioning of our economy in response to the crisis. This has never happened before in living memory.
They are very afraid of this creating a deep recession, a liquidity trap and deflation which will be disastrous and difficult to get out of. They have decided to mitigate from the damage the intervention is already creating by creating liquidity, protecting jobs, protecting businesses. They've effectively bailed out or nationalised large portions of the economy and are putting the income tax system into reverse to stave off mass unemployment, loan defaults, etc.

This is an intervention that nobody has seen before, and nobody outside of government and BoE has any control over. Normal market forces certainly didn't bring this on, and they wont bring us out of it without first switching off the restrictions (shutting down shops, limiting movement, etc) that have halted the normal economy.

Much larger businesses than ours are not having to accept the full risk of this intervention. Instead of laying off employees, they're able to retain some of them through the governments coronavirus mitigation package. Thinking longer term, if these restrictions carry on (e.g. 1-2 years), then many of us, no matter how large a warchest you have will ultimately be wiped out. So why shouldn't PSC contractors be eligible for protection also?

+1 to all this. Despite operating inside IR35, I've always also understood the risks of running my own business, and have always operated a warchest albeit one outside the company (in effect, a much larger savings buffer than I ever carried as a permie). But as you've said, these are extraordinary times. When massive corporations need government bailouts it's somewhat perverse to just say 'yah boo sucks' to us!

But again, as I've said previously - I still know I'm lucky compared to most.

[Glencky]

Maybe some glimmer of hope:

https://twitter.com/MartinSLewis/sta...95600433356804

Interesting, thanks for sharing.

As an side, I've always really liked and respected Martin Lewis. There's a reason he's one of the most trusted people in the UK.