Why we MUST ditch our lazy attitude to finding work through agents and agencies

[SpontaneousOrder]

If you can earn double a permie's gross as a contractor how can it not still be worth being a contractor even paying the same rate of tax as everyone else?

You're only really getting back 20% of expenses as things stand now, so is having to pay that 20% of a B&B bill really going to "screw the 'stay away' crowd"?

if your daily commute is, lets say, 4 hours. And that commute costs you heading towards 10k a year after tax, then when you factor in the lack of permie perks, the marginal increase in take home after those expenses (remember we'll be in 40% territory), AND the fact that you're commuting 4 hours a day...

Then it's arguably a far better deal to commute only 1.5 hours per day and chill as a permie.

[VectraMan]

Yes, Because...

If your Ltd reimburses you your T&S costs that will be counted as remuneration and not expenses, so you will then pay tax on that as if it was salary. Your company will not be able to claim tax relief on it. If the company pays T&S on your behalf then it will be regarded as BIK and taxed accordingly, and the company will not get tax relief on it.

We would not just lose the 20% relief, we would end up paying tax on the cost of expenses as well.

You contractors can't half BS when it comes to justifying tax avoidance.

If they disallow travel and substinence expenses all it means is you have to do what everybody else does: pay for it out of your own pocket. There's no point in YourCo reimbursing you the expenses (because it would be a BIK anyway). You're exactly in the same position as the millions of permies, which is the point. YourCo pays you, either via salary or tax avoiding dividends, and you pay your expenses.

[SpontaneousOrder]

You're exactly in the same position as the millions of permies, which is the point.

Have you bumped your head recently? How many millions of permies do you know that spend their own post-tax income on 5 nights of hotel stays every week?

[Zero Liability]

If I also read this right, its not just expenses we are being hit with, we are going to be automatically deemed within IR35? If this is the case what is the point of running our own LtdCo anymore, the brollys must be happy(ish)

It could go that way, but it's a separate issue, as SDC is not sufficient at present. The IR35 reform may change that, but it's still in discussion and will then undergo a consultation, so I can see why people are predicting 2017 for any changes resulting from that (which I think makes sense as well as rushing it through may be met with more severe resistance by end clients, who are ill prepared for it.) So they'll have to skip that hurdle, and even then, they're not proposing changes at the legislative level but at the enforcement level, so it may yet fail in the courts. Plus, not all clients are going to be happy with this. It's a matter of them organising to voice their complaints.

If it does all pass, I can't see contractors going via an agency (i.e. the vast majority) being much different than FTC employees. All the risks and the lack of employment rights remain, but none of the benefits of permiedom accrue.

[TheLordDave]

In that case I expect 25 paid days a year holiday from client co. Sick leave, training and a 14% pension contribution like the permie next to me gets. Oh and also employment regulations regarding contract termination and paternity leave and bonus and everything else us disguised permies don't get!

[MicrosoftBob]

For those who say we just go direct in future, what incentives are their for the client to help up? The main reason they use agencies is to make their life easier in the first place.

None, if the contract market dries up they'll just scream skills shortage and import more slaves

[Gordon Ice]

It's not over yet..

I'm guessing that some/all of the following will come to pass:

1. Contracts will be amended with new clauses to transfer the risk of being found inside SDC/IR35 all the way down the contractual chain to the Contractor Ltd who will be expected to take out a new type of indemnity insurance covering the Client and/or the Agency.
2. Given that the pivotal part of SDC (and most probably IR35) is the involvement of an intermediary (Agent) the contractual chain will evolve with the Contractor Ltd going direct and paying the Agency a placement fee and/or monthly commission.
3. Agencies will evolve into Professional Services businesses (i.e. no longer operating as an "intermediary") and sub-contract to Contractor Ltd's.
4. The use of Contractor Marketplaces may actually reach critical mass replacing (or greatly reducing) the need for Agencies, hence avoiding the pivotal part of SDC/IR35.
5. Confirmation of working practises and being outside SDC/IR35 will be confirmed in writing (as standard) by the Client/Agency/Contractor Ltd before any contractual agreements are made. No "outside SDC/IR35" = no contract or higher rates.
6. Higher rates in general.
7. Contractors will start trading as a different legal entity (assuming that being classed as a PSC is material to SDC/IR35)

It's not over yet folks.. a whole industry grew out of dealing with IR35 and I suspect this will be exactly the same; too many interested parties, and too much money to be made/lost. Whatever HMRC finally decide upon will be impossible to police (just as for IR35) and as long as Clients can effectively transfer/mitigate the risk it'll be business largely as usual.

Here's hoping.

[Contreras]

Yes, Because...

If your Ltd reimburses you your T&S costs that will be counted as remuneration and not expenses, so you will then pay tax on that as if it was salary. Your company will not be able to claim tax relief on it. If the company pays T&S on your behalf then it will be regarded as BIK and taxed accordingly, and the company will not get tax relief on it.

We would not just lose the 20% relief, we would end up paying tax on the cost of expenses as well.

Eh that doesn't sound quite right. Care to expand upon it with some numbers?

[AtW]

Bloody Tories. After supporting them for years in 2 months they have killed any chance of me supporting them again.

+100

Will vote for Komrade Korbyn, at least he will make sure that inherited wealth Tory Scum will squeal like a pig.

[AtW]

Hands up who voted Tory