IR35 under the Tories

[Jog On]

dividends are taxed in the same manner as PAYE

Can't see that happening

[NotAllThere]

As others have observed, it'd be impossible (or unpopular) to implement.

My gripe with IR35 never was about paying more tax. It was about the fact until the courts ruled, it was not clear who was in and out. It's now clear that you can be out, if you get the right contract written, which is blatently stupid and unfair. If the govt found a way to make freelancers pay more tax (as opposed to current situation) where we pay less, I would have not been happy about paying more than employees, but would have got on with it - as my rate is far higher than what I'd get as a permie.

The end result of such a move would be fewer contractors. There'd be no point for many. The pool would reduce, so rates might go up, and I have less competition. However, few contractors would, as a whole, be had for the UK.

In CH, you don't get tax relief on dividends, so everyone is in IR35. I still wouldn't go permie. However, expenses are rather more flexible here!

[The Wikir Man]

As others have observed, it'd be impossible (or unpopular) to implement.

My gripe with IR35 never was about paying more tax. It was about the fact until the courts ruled, it was not clear who was in and out. It's now clear that you can be out, if you get the right contract written, which is blatently stupid and unfair. If the govt found a way to make freelancers pay more tax (as opposed to current situation) where we pay less, I would have not been happy about paying more than employees, but would have got on with it - as my rate is far higher than what I'd get as a permie.

The end result of such a move would be fewer contractors. There'd be no point for many. The pool would reduce, so rates might go up, and I have less competition. However, few contractors would, as a whole, be had for the UK.

In CH, you don't get tax relief on dividends, so everyone is in IR35. I still wouldn't go permie. However, expenses are rather more flexible here!

Solidarity, sister!

[dx4100]

I currently work outside of IR35...

The problem I have with IR35 is not subjecting all the company earnings to PAYE (even though this would see me paying more tax) it is the stupid restrictions applied to expenses. If they want to treat contractors with one customer as a disguised employee (which I think is a weak argument at best) then fine, but don't stop me attempting to operate like a business and grow my business further by having over the top restrictions on expenses and such like.

It benefits no one....

[dx4100]

Very sad stuff...

[malvolio]

I currently work outside of IR35...

The problem I have with IR35 is not subjecting all the company earnings to PAYE (even though this would see me paying more tax) it is the stupid restrictions applied to expenses. If they want to treat contractors with one customer as a disguised employee (which I think is a weak argument at best) then fine, but don't stop me attempting to operate like a business and grow my business further by having over the top restrictions on expenses and such like.

It benefits no one....

What are you on about? IR35 has zero effect on business expenses, in or out.

[dx4100]

What are you on about? IR35 has zero effect on business expenses, in or out.

?

5% rule + travel, accommodation and subsistence etc...

I am not a IR35 expert but my understanding is there are restrictions. Where am I going wrong with this ?

Lets say I wanted to do a massive leaflet drop advertising my company. Or a advertising campaign. I thought that sort of stuff would of been regarded as not being a "direct cost" related to the contract and hence would not be allowed ?

[centurian]

Does anyone really worry about IR35? I have insurance through QDOS that should cover me for every eventuality, I'd rather pay £500 pa for that than a few £K more in tax.

This isn't a bash at QDos - in fact I think they are reasonably upfront about their TLC35 product. But if you think it offers 100% protection, you're heavily mistaken.

Many of the people in the Montpelier offshore scheme thought their scheme was 100% legal.

[Walsingham]

An article I saw in the DT on the subject:

One radical option being considered is to allow the 600,000 people who sell their services through "one man" companies to opt out of employment.

Instead of paying 11pc Class 1 National Insurance Contributions (NICS) on their income they would pay the £2.40 a week due under Class 2 NICs, which is paid by the self-employed.

Anyone doing so would lose the right to statutory redundancy pay, maternity pay and jobseekers' allowance.

http://www.telegraph.co.uk/news/elec...-employed.html

Sounds fine to me.

[malvolio]

?

5% rule + travel, accommodation and subsistence etc...

I am not a IR35 expert but my understanding is there are restrictions. Where am I going wrong with this ?

Lets say I wanted to do a massive leaflet drop advertising my company. Or a advertising campaign. I thought that sort of stuff would of been regarded as not being a "direct cost" related to the contract and hence would not be allowed ?

This is what really tees me off. You're running a company, you ought to have some idea how it all works.

Even inside IR35 you can deduct business expenses: the only one you can't have is training (because that's your employer's cost, even though you don't have one. Go figure). The 5% is deducted from YourCo's gross CTable income, i.e. after expenses and salary costs. You pay PAYE and NICs on the remaining 95%. Despite what it says, the 5% is nothing to do with expenses, it's simply an allowance becuase you're running a business. Except of course the whole point of IR35, in NL world, is that you aren't. That's why it's such an abortion of a law.

Anyway, google "the potted guide to IR35" and have a read. It might help.