It's the (possible) end of the world as we know it.

[Zero Liability]

No you don't. Not by a long shot.

A contractor has a very low risk profile.

If you think you assume the same level as risk as the businesses you are contracting for either you only work for really small companies or don't understand risk!

Where did I say the businesses you are contracting for? That's a very narrow subset of the totality of businesses out there. I agree that our risk profile is low, but why does that necessarily preclude you from being a business?

[Mich the Tester]

...various contrivances to ignore contracts utilised within the boundaries of the law to ensure NI is charged, irrespective of any justification for this rather peculiar form of tax.

To finance a social security system that was great for the 1950's but is well past its sell by date and is hopelessly inadequate for modern ways of working?

[Zero Liability]

It already gets a premium, it's called £400+/day

It could be for any number of things. At the end of the day, you bring the client more flexibility and fewer fixed costs, and they need to offer you enough to entice you away from permanent employment, and in turn, you need to ensure you have enough to cover dry periods, so it is a matter of market forces as much as anything else.

To finance a social security system that was great for the 1950's but is well past its sell by date and is hopelessly inadequate for modern ways of working?

In a nutshell.

[d000hg]

Exactly. And if you are forced through PAYE it will be £500PPD

Um, no. If you paid PAYE at the same rate as permies that would be just fine. It's paying NI twice which doesn't make sense.

Saying contractors should earn far more AND pay less tax is silly.

[Zero Liability]

Um, no. If you paid PAYE at the same rate as permies that would be just fine. It's paying NI twice which doesn't make sense.

Saying contractors should earn far more AND pay less tax is silly.

Which is fair enough. Contractor rates are a matter for supply and demand to determine. I am against NI in its current form entirely, particularly if you are a younger worker you will derive very little benefit from it and it costs you a sizeable chunk of your salary, and from the employer's end it is also very costly, creating disincentives to hire you. This is a separate question to contracting though, which just so happens to be a mechanism by which you can avoid NI by and large if outside IR35. I simply think the government's take on it and what constitutes 'employment' is highly arbitrary, but that is my view of NI in general. They will change the rules when they cannot get their way on the basis of their own rules. Stated intentions mean bugger-all, which is the one major point to take away from IR35 and similar legislation.

[MPwannadecentincome]

Um, no. If you paid PAYE at the same rate as permies that would be just fine. It's paying NI twice which doesn't make sense.

Saying contractors should earn far more AND pay less tax is silly.

In which case the client will deduct the employer's NI from the £x00 per day to make it equitable with a permie. NI is paid twice for the permie.

How is it different from the client paying £x00 per day and the PAYE deducting employer's NI.

The client is not going to pay more except for the fact that they have to pay a premium for specialist skills, lack of benefits, lack of employment rights and to make up for the days where an invoice is not going to be sent (training, sickness, holidays) and the level of premium (or lack of) will be dependent on supply vs demand.

[Zero Liability]

Agreed.

I see a future in which agencies write in during the consultation to complain that they are on the hook for income tax/NICs. In that future the government won't back down and the risk averse agencies won't want to work with a PSC because of the tax/NICs risk for them. However I foresee the agency continuing to issue contracts that don't result in employment under case law leaving individuals with all the income tax/NICs to pay, but none of the benefits of employment protection.

Supposing this is all true, and it does play out this way, isn't it at least better that they are on the hook for it, rather than the contractor? Of course they may adapt to it, as you say, and it could make them more risk averse in the interim.

[expat]

My company is as real as any FTSE limited company. I am subject to the same laws as any other Ltd company.

I am not arguing that, I am merely suggesting that this Tory(-led) government sees you and me as workers, regardless.

[Zero Liability]

Just out of curiosity - the Lords have been considering the potential amounts at 'risk' with regard to IR35, but have they also been considering the amount of economic growth and flexibility to the employment markets contractors and other freelancers bring with them? It's pretty simple and short-sighted to simply point at the costs of it (from the Revenue's perspective). If it's just about the money (which it is), I am sure there are plenty of multinationals that they can label as "tax dodgers" (I am not going to get into the supposed "immorality" of tax avoidance) and get the money from them. Unless of course the real fear is that this will disgruntle them, thereby ending political aspirations, so much easier to just focus on the contractors and their engagers.

[vetran]

the killer isn't the 13.8% NI or holiday pay, the clients can factor that in. Its the big liabilities of employee rights.