Autumn Statement 2016

[MrMarkyMark]

I don't have a problem with not making money from VAT, looks likely we'll all just ditch FRS then?

We paid a lot less tax than most people earning similar amounts. So that's an easy way for HMRC to get some more money knowing we can't really kick up too much of a fuss lest we get headlines "£100k contractors complain about having to pay tax like everyone else"

Our income being taxed in a way broadly inline with permies earning similar amounts is reasonable IMO, I don't want to pay the extra of course. The fear seems to be they might continue to ramp up our taxes (divi tax, etc) so we're relatively worse off than permies e.g. IR35, expenses claims, etc.

I don't really see how you can compare the two?
Senior permies get a lot of other taxable and non-taxable benefits, also.

They are taxed as they are constantly working, we get taxed whether, via corporation tax and dividends, whether we work that year or not.

No comparison, IMO.

[TheCyclingProgrammer]

We paid a lot less tax than most people earning similar amounts

Do we? We pay a bit less, but not a great deal less.

We have some flexibility that employees don't have (e.g. the ability to defer taxation by only drawing dividends as we need), there are certain things we can claim as expenses that employees can't usually and some of us may have further scope to save tax by issuing shares to a partner etc. but in general there isn't a massive difference and of course we don't have any of the same sorts of guarantees of income or other employment rights and perks as an employee.

A quick calculation suggests that on a £100k turnover, assuming zero expenses to keep things simple and a basic salary of £8060 and the rest taken in dividends, you'd pay £18,388 in corporation tax and £14,574 in income tax leaving you with a take-home of £67,038.

OTOH a £100k salary taxed as PAYE would result in tax and employees NI of £34,533 giving you a take-home of £65,467 - only a couple of grand less.

Its not a perfect comparison - an average contractor would have some expenses. My average annual costs are about £5k and I don't travel much. But the government is also making an additional £12k in employers NIC from the employee!

Of course, I acknowledge in practice many contractors may choose to only take dividends up to the higher rate threshold, build up a warchest and potentially withdraw the retained profit as a capital distribution at some point in the future, subject to a much favourable tax rate, but why shouldn't we?

[youngguy]

I don't have a problem with not making money from VAT, looks likely we'll all just ditch FRS then?

We paid a lot less tax than most people earning similar amounts. So that's an easy way for HMRC to get some more money knowing we can't really kick up too much of a fuss lest we get headlines "£100k contractors complain about having to pay tax like everyone else"

Our income being taxed in a way broadly inline with permies earning similar amounts is reasonable IMO, I don't want to pay the extra of course. The fear seems to be they might continue to ramp up our taxes (divi tax, etc) so we're relatively worse off than permies e.g. IR35, expenses claims, etc.

What about the risk we have that those others you mention don't? Or the healthcare , holiday, sick pay. Training, job security ? The insurwnces we have to keep etc

We may earn similar but our contracts are not similar

[seeourbee]

Autumn Statement 2016

Yes my calculations (different salary, different expenses) show practically the same tax.

But HMRC are concerned about e'rs NI (not the e'es NI). Which begs the question - why pass the ir35 decision to the hirers as it will make their costs go up 12.5% higher. Name me one sane business model that would choose that?!

[NigelJK]

The public sector does not need a business model. It has access to an almost limitless pile of cash donated by the tax payers.

[TheCyclingProgrammer]

Yes my calculations (different salary, different expenses) show practically the same tax.

But HMRC are concerned about e'rs NI (not the e'es NI). Which begs the question - why pass the ir35 decision to the hirers as it will make their costs go up 12.5% higher. Name me one sane business model that would choose that?!

Exactly - the big loss is the employers NI.

Which also begs the question, why, even if inside IR35, should we be paying it?

[MPwannadecentincome]

We paid a lot less tax than most people earning similar amounts. So that's an easy way for HMRC to get some more money knowing we can't really kick up too much of a fuss lest we get headlines "£100k contractors complain about having to pay tax like everyone else"

Our income being taxed in a way broadly inline with permies earning similar amounts is reasonable IMO, I don't want to pay the extra of course. The fear seems to be they might continue to ramp up our taxes (divi tax, etc) so we're relatively worse off than permies e.g. IR35, expenses claims, etc.

If you have a pension you will pay more than permies earning a similar amount, not being able to calculate NI (employer and employee) after deduction of pension will mean you pay more there - unless the Agency takes on pension payment into our own pension funds.

[SueEllen]

What about the risk we have that those others you mention don't? Or the healthcare , holiday, sick pay. Training, job security ? The insurwnces we have to keep etc

We may earn similar but our contracts are not similar

Apart from holiday these depend on the employer.

Also job security doesn't exist for anyone in the UK anymore unless you are a member of the Royal family.

[youngguy]

Apart from holiday these depend on the employer.

Also job security doesn't exist for anyone in the UK anymore unless you are a member of the Royal family.

Contractually it does....we have explicitly have it written into our contracts that we can be binned at a moment's notice. The same is not true for permies (unless you work for sports direct!)

[SueEllen]

Contractually it does....we have explicitly have it written into our contracts that we can be binned at a moment's notice. The same is not true for permies (unless you work for sports direct!)

Actually those who work for Sports Direct, many other retailers, in the care industry and local government to name a few are on zero hours contracts. So while they aren't binned they just don't get any hours.