The Official Budget 2016 thread

[seeourbee]

It really does make you think why they assume a few tests will sort this out. Basically the Gov. wants to tax 'disguised employment' and assume that a contractor is tantamount to a short term employee - mainly the grounds that the contractor is doing what an employee "can do". The reason why the employee isn't doing it already is either (a) they have no space capacity or (b) they don't have the skill-set. And that is the very same reason why they get consultancies in.

So, on the grounds that consultancies like PA and McKinsey are physically human beings that can work in the same office/buildings as Public sector employees, they could fall under the new rules for PAYE deduction as well, depending on how far you take the letter of the legislation. At which point the whole things starts to crumble and collapse again. McKinsey won't tolerate that. They need to get the wording very precise without it being prejudice or discriminatory at the same - and that is very, very difficult indeed.

[TheFaQQer]

One way or another, from April 2017 IR35 is not an issue for public sector contractors.

Unless you are concerned that if you started something now and were still doing it past next April then find that you have to get checked, then fail the test and find it's back-dated, and then have to join the market at the same time as a hundred thousand other contractors or you have to increase your rate to compensate for the additional tax and loss of travel and subsistence which the client refuses to do and you end up terminated anyway.

But I'm a "glass is half-empty" kind of guy

[jamesbrown]

So, on the grounds that consultancies like PA and McKinsey are physically human beings that can work in the same office/buildings as Public sector employees, they could fall under the new rules for PAYE deduction as well, depending on how far you take the letter of the legislation. At which point the whole things starts to crumble and collapse again. McKinsey won't tolerate that. They need to get the wording very precise without it being prejudice or discriminatory at the same - and that is very, very difficult indeed.

These consultants are employees of the consultancy, so it's moot (they are on PAYE). For work that is farmed out by a consultancy, the rules will be propagated upwards.

[Pondlife]

Nice little change (for the government). There is no provision in those notes for using pension payments to reduce the deemed payment tax liability, as there currently is under IR35.

So if you get stuck inside IR35 under these rules, you won't be making company pension contributions, will you?

An excellent question indeed.

[Pondlife]

From https://www.gov.uk/government/upload..._explained.pdf (PDF):

you can withdraw the money at any time before you turn 60, but you will lose the government bonus (and any interest or growth on this). You will also have to pay a 5% charge

(Illiterate Designer lack of capitals at start and punctuation at end reproduced from the original.)

So if you need your money for some reason, they take 5% off the top, because we're all dipping into your wallet together

That's a bit f'ing sneaky and so it'll only really appeal to those that intend to use it as a pension.

[mudskipper]

An excellent question indeed.

Agreed. But if I was on PAYE on a public sector contract, I'd be pushing for my gold plated public sector pension.

[seeourbee]

These consultants are employees of the consultancy, so it's moot (they are on PAYE). For work that is farmed out by a consultancy, the rules will be propagated upwards.

Yes appreciate that. But I am also an employee of my company with a salary and pay PAYE on that.

[DaveB]

Agreed. But if I was on PAYE on a public sector contract, I'd be pushing for my gold plated public sector pension.

I can see some interesting challenges / discussions coming up in the consultation.

Will IPSE be making representations?

[mudskipper]

I can see some interesting challenges / discussions coming up in the consultation.

Will IPSE be making representations?

'Tis early days, but I've no doubt they will.

[jamesbrown]

Yes appreciate that. But I am also an employee of my company with a salary and pay PAYE on that.

But that isn't the target, it's dividends. Really struggling to see your point. They can very easily introduce new rules in the public sector through contractual changes, based on the results of an upfront test. So a contract will be either inside or outside from the start. It will impact new business, but it remains to be seen how they will implement this for existing business (those in public sector gigs when the changes bite).