Budget 2009 - What does it mean for contractors?

[Mich the Tester]

Looks like its a 50% tax on 100K earners. Combine that with NI and there will be a drain brain. Who wants to give more money to the govt. than they get themselves?

An awful lot of 100K earners work for themselves and have a lot of control over their salary. Here in NL, when I'm in danger of getting into the 52% income tax scale my accountant phones me and tells me to stay in more expensive hotels close to clientco to increase my business costs (there's no limit on business hotel costs in NL). So I spend much of the year staying in cheapo places and then take up residence in a 5* place like the Amstel Hotel at the end of the year. Add in some first class trips to 'software conventions' on the Cote d'Azur and hey presto, my salary for tax purposes can end up below the average wage. Brilliant political thinking; tax people so heavily they pay themselves less. The hotels do very nicely though.

[snaw]

It's possible, depends how HMRC writes the rules, perhaps they'd require owner who buys new car with this discount to own new car for another year, but even that is not fool proof - £2k is not a lot of money, but it's bound to create a market for buy/sell banger schemes.

I should know by now that irony is completely lost on you.

[ChimpMaster]

List of post budget consequences:

1) Contractors using Umbrella Companies or similar "Loan" avoidance ideas will get bashed with the treasury baseball bat until every last penny falls out their pockets

2) Limited companies with one employer will get a letter inviting you to personal interviews with the intention of finding you IR35 compliant , any legal challange will be met by replacing previous fair minded judges of compliance cases with "Your guilty" rubber stamping admin staff.

3) Employers will be even more frightened to take on contractors with even more red tape from HMRC.

4) Not only will you have to deal with desperate drug infused junkies stabbing you for 10 quid in your wallet when you get on a bus (if you have 10 quid left) but your also going to have a similar experience from desperate and equaly dangerous tax officials (ok so they wont stab you but you might just see them putting your house up for sale and carting all your assets down to the local auction , similar effect) , thoes that "collect" the most money will be given incentives.

My advice is to lease everything and put all your money in a foriegn bank , that way if you do get "selected" then you can at least go abroad and start again.

Thought I would just tell it how it is , have a nice day.

He's right, and you know it.

[Pondlife]

He's right, and you know it.

Nah, This was a pretty contractor neutral budget as far as I can see.

FBT/Income splitting is still deferred - winner

50% tax on >£150K only affects those who are IR35 caught or using a brolly though laziness.

Reduced tax relief on pensions for earners over £100K - see above plus those who are stashing masses away as they're due for retirement shortly.

People using dodgy overseas loan schemes - Well, this was already happening with BN66(?) etc

It could have been much worse IMHO.

This won't affect "employers" use of contractors.

My £0.02

[Mich the Tester]

Isn't this all a bit theoretical if the end result is economic armageddon and Labour holding up a begging bowl at the IMF?

[SantaClaus]

Isn't this all a bit theoretical if the end result is economic armageddon and Labour holding up a begging bowl at the IMF?

Speaking of which, today is the alledged Martin Armstrong crash day

[SallyAnne]

I love you Sally Anne

Yeah, that's what he said too

(sorry - is this meant to be a serious thread?)

[Don Clark]

They showed Dennis Healy on the TV last night and his 'sparkle in the eye' promise to come after the better off. Back then they made no bones about their dislike for anyone getting on and I suspect they will not worry about demonstrating so now. They think it's a vote winner with their core supporters, however NewLabour have disenfranchised those guys in their attempt to court the 'middle classes'. It's going to get awfully messy from now on and I would suggest an early GE might be his best course of action, save a reasonable number of seats at least.

[snaw]

Yeah, that's what he said too

(sorry - is this meant to be a serious thread?)

That before he .. umm, better stop now.

[NickNick]

I'm no economist but it seems to me that this government needs some common sense. If you tax people 50% of their income plus NI they will earn less than the Government get in taxes. Who would accept a job at those terms? And thats not the only common sense lacking.

Well, excepot for the fact that the 50% is only on income above 150K, so you'll never get less than half.