The official Budget 2017 DOOM thread

[BolshieBastard]

Using your contacts, I have had 3 IB roles this way?

You said something about grammar?

So, are you making a statement or don't you know how many IB roles you've 'had that way'?

I'd have thought someone who trumpets being a '2 contractor household again' repeatedly on an internet forum would have a grasp of such things. Clearly not in your case.

[d000hg]

I realise I'm preaching to the choir here but where has this perception that incorporating gives us all magical tax savings compared to the employed?

Until the divi tax it was certainly true, and there certainly is the perception out there regardless if it's true... probably because it takes time for the new facts to filter through to the general public. People in £30k jobs will have heard some boastful contractor talk about how much he earns and how little tax he pays (quite possibly said contractor wasn't even legal in his tax affairs)

As we were discussing the other day, the divi tax does seem to broadly bring overall tax inline on us the worker already... but there is this big hole where no NI is being collected. We get all the NI benefits without anyone paying "the other half". There doesn't really seem a good answer to that. If there is no employer to pay NI it's not good for the worker to pay it on top of everything else.

[SussexSeagull]

I guess it really depends on what you do, who you work for and what your rate is. I'm annoyed by the principle of what was announced in today's budget just because it doesn't make that much sense to me (the financial impact is minimal) but I'm under no illusion that I'm still much better off working for myself. In a bad year I can normally turnover around the equivalent amount to what I'd be getting as a full-time salary, in a good year I can earn anywhere from 50-100% more than this.

Of course, if you're a long-term bum on seat contractor who does loads of work for the public sector, works mostly on-site in the same location (so can't claim travel expenses), is borderline caught by IR35 etc. then I can see how contracting might seem less appealing right now...better make sure your rate is worth it.

My advice to those contractors is to try and move away from the normal agency/client 12-24 month gig type arrangement and try and take a more freelance/consultant approach. Try and find clients directly, differentiate what you offer - you're not just a bum on seat, your an expert who can save your client money. You'll have more control over what you charge (I've put my rate up almost every year and have more than doubled what I was charging when I started 8 years ago) and will get more more interesting projects .

Its higher risk because you need to find your own gigs but if you're successful you'll be able to be more selective and will even be turning away work, you'll have no agency bulltulip to deal with and you greatly reduce your chances of being caught by IR35.

If this approach doesn't appeal, then perhaps a return to permie-dom is the way forwards.

The problem is the contractors who fill seats up for years on end and are employees in all but the way they are paid are dragging us all down. No matter how many times you tell them they should consider not going to company meetings they still plow on.

I suspect the people in the middle of your and the above example, good solid technical experts who can come in for six months to get a project over the line might be the ones who start to feel the squeeze.

[afrocentric]

Using your contacts, I have had 3 IB roles this way?

In any case, in IB, its a mute point as they will generally force you to use an internal agency in any case?

That is exactly the problem. For example, Resource Solutions are here, there and everywhere! Perhaps contractors should band together and create consultancies ala Logical et all. Why not ?

The one Director Ltd company is at the edge of the precipice right now. This govt determined to put us all to the sword for good.

[MrMarkyMark]

You said something about grammar?

So, are you making a statement or don't you know how many IB roles you've 'had that way'?

I'd have thought someone who trumpets being a '2 contractor household again' repeatedly on an internet forum would have a grasp of such things. Clearly not in your case.

Yawn.

I don't know what an earth you think that got to do with it?
It seems you are just becoming a bitter retired old man.

Shame.

[jamesbrown]

Has anyone done the calculations to see how much the £3k dividend tax allowance reduction will be mitigated by the increases in the personal allowance and reduction in Corporation Tax?

I have a hunch that it will largely neutralise it. Personal allowance is £11.5k from April, potentially £12k from April next year, meaning we'll go from being able to take £16k in salary + dividends tax free to £15k in salary + dividends tax free, a tax increase of only £75. Add to that the reduced CT and increase in the higher rate threshold - which means we'll be able to pay ourselves more at the basic rate, and its really not that big a deal at all.

There's no way to easily compare them, because it is entirely strategy dependent, but the CT reduction will (more than) offset the reduction in the dividend allowance in many case. For example, a 1% reduction on £200k is £2k, which you could assume is taxed at 32.5%, leaving £1350, which is greater than the theoretical maximum hit from the dividend allowance reduction of 3000*0.375=£1125. Obviously, this is much less for a £100k turnover, but most people won't be paying higher-rate dividend tax either.

[TheCyclingProgrammer]

Believe me, most of us want to follow your approach but are clueless as to how to go about it.
How does a programmer contractor with over a decade experience in the Investment Banking sector secure a gig without the intermediation of pesky agents. Nigh on impossible in the current market ! Perhaps the only solution is to move to another sector?

Any advice, links etc as to go about the consultancy route will be much appreciated. Thanks

I have no experience in that sector however I think you're probably right - branch out into different sectors.

Its possible to earn a very decent day rate without working for banks and other mega corporations - maybe not 4 figure day rates (though I know of some people who do what I do that charge that much) - but how many contractors actually earn that much anyway?

Having a steady supply of work over the last 8 years is something I put down almost entirely to making myself known amongst my peers, making a name for myself through contributions to open source projects, blogging, attending events, even speaking at a couple.

I'm no Twitter celebrity but I have nearly 2000 followers - many of whom are peers and I've found a lot of work that way. I get a lot of work through my website because due to my well linked blog (not so much in recent years, I haven't had the time to blog for about 3 years) I get good results on Google. If I'm struggling to find anything I can tweet that I'm looking for work and I'll often get numerous retweets and enquiries as a result.

I go through patches of not getting work still and in recent years I've had a tendency to take on longer projects for the additional security. A long project for me is anything more than 3 months. Almost everything I do tends to revolve around a specific project (which is especially helpful when it comes to IR35) with a key deliverable.

I do occasionally have gigs where I'm brought in to help out an existing development team with the development of an existing product (but I still try and keep the scope as tight as possible). These tend to be longer projects and I will take them on from time to time for the relatively income security - extra diligence is required when it comes to things like D&C and staying on the right side of IR35 though I tend to mitigate this up front by being quite clear about how and where I work (I've had clients want me to be on-site more before and I've said no).

You still need a good warchest - I'm not comfortable with anything less than 12-18 months in my company reserves.

I really ought to find more time to contribute to open source projects again (I was quite prolific many years ago) and blogging but since children came long (I have two now) I rarely have the time. Its important though because my reputation can only last so long without keeping my profile up.

I tend to have two main lines of work - iOS development and backend web development. This can obviously be an advantage as I have two skills to sell but it can also mean more work is involved in keeping abreast in changes. I spent a couple of years doing mostly iOS work and found I'd really fallen behind in keeping up with the changes to the web framework I normally use. Every year there's a new version of the iOS SDK to review and learn.

I've done two gigs through an agency in my 8 years as a freelancer - one was forced on me (big name client, contacted me but needed to go through agency on their preferred supplier list) and the other was a small project for PartyGaming many years ago (probably the dullest project I've ever done).

Sorry if that was all a bit rambling but hopefully useful.

[AtW]

We get all the NI benefits without anyone paying "the other half".

What are those benefits exactly, right to get £100 per week by the time I am 70?

[AtW]

There's no way to easily compare them, because it is entirely strategy dependent, but the CT reduction will (more than) offset the reduction in the dividend allowance in many case. For example, a 1% reduction on £200k is £2k, which you could assume is taxed at 32.5%, leaving £1350, which is greater than the theoretical maximum hit from the dividend allowance reduction of 3000*0.375=£1125. Obviously, this is much less for a £100k turnover, but most people won't be paying higher-rate dividend tax either.

In 2019 there should be another 2% reduction, so they won't have any dividend allowance left to make up for it...

[davethehedgehog]

Yet another budget aimed at us "tax dodging contractors".

I was actually planning on taking on a physical office this year and recruiting a couple of apprentices and an account manager or two. Between the dwindling benefits vs. risk now in running your own company I don't think I'll bother. Probably batten down the hatches and look at moving elsewhere.

In my opinion this is a result of two things. One, the perennial jealousy of some permies, making this worthwhile since the money is minimal when compared to the political capital in these changes. And two, the clear lobbying done by big firms and online companies, who pay very little tax but control a lot of opinion.