Staying in the same public sector contract after April 2017

[kolata]

Interesting bit would be employer vs employee NICs - what would we pay if we were given a net sum or would that net sum simply go straight from corp bank to personal because it's already been "treated"?

The fact is that no contractor will agree to pay tax + NIC out of their day rate. We will get more expensive for the PS clients. Fact.
If they agree to cover NIC+tax+ENIC, great.
Very fast calculation showed me that even dropping the day rate by 10-15% will result in more money in my personal account than client > co > CT > divi tax > pocket. This is assuming client > net pay into personal account and taking into account the co's expenses such as directror's payments

[LondonManc]

The fact is that no contractor will agree to pay tax + NIC out of their day rate. We will get more expensive for the PS clients. Fact.
If they agree to cover NIC+tax+ENIC, great.
Very fast calculation showed me that even dropping the day rate by 10-15% will result in more money in my personal account than client > co > CT > divi tax > pocket. This is assuming client > net pay into personal account and taking into account the co's expenses such as directror's payments

If it's handy for home and they know no other market, then they'd have to take the tax hit rather than end up workless. The PS notice periods will be the main thing that is of interest after April; contractors in PS will continually be on the lookout to jump ship if they're getting screwed over.

[eek]

Interesting bit would be employer vs employee NICs - what would we pay if we were given a net sum or would that net sum simply go straight from corp bank to personal because it's already been "treated"?

Supposedly its going to be already treated with all NI and estimated income tax deducted (that's why actually fighting if inside is pointless you ain't getting that proportion of the money back).

Its the reason why I would be going give me everything as a pension - I will not be taking any salary for this project.

[LondonManc]

Supposedly its going to be already treated with all NI and estimated income tax deducted (that's why actually fighting if inside is pointless you ain't getting that proportion of the money back).

That's pretty much my question (not that I'm looking at PS) - why aren't they simply putting in big red letters to your accountant - treat this contract as inside IR35 and you pay the full whack on it. Rather than trying to do the accountant's job for them, they're actually confusing things.

Its the reason why I would be going give me everything as a pension - I will not be taking any salary for this project.

Would that be permissible? Also, I presume you have some other sort of war chest to cover the PS contract if you're asking for it as such?

[mudskipper]

Supposedly its going to be already treated with all NI and estimated income tax deducted (that's why actually fighting if inside is pointless you ain't getting that proportion of the money back).

Its the reason why I would be going give me everything as a pension - I will not be taking any salary for this project.

Subject to the 40K a year limit.

[eek]

Subject to the 40K a year limit.

Got plenty to carry over at the moment. Plus it means I'm only there 3-4 months so gives me an excuse to leave asap.

[youngguy]

I think these Qs prove exactly how complex and cumbersome it will be. Qs such as eek's (why not put it into my personal account given I have paid tax on it, can the PS pay direct into my pension rather than pay me a salary etx) will inundate the HMRC helpline and they absolutely won't have thought of such scenarios . They seem to forget that most contractors think a little outside the standard box with regards to finances and most have accountants for advice.

[youngguy]

Not a fact at all. I'd imagine that all sorts of new ways of operating will need to come into play to get round the expertise exit post-April. Perhaps expenses paid but being inside IR35 wouldn't be a bad position, especially for those that have to stay away four nights a week.

I mentioned this previously and think it is an obvious compromise. All Gov depts have ways of booking hotels and travel , so allow the contractor to book theirs this way (after all they are a disguised employee). That takes care of the lion share of expenses. Now we just need a solution for insurances, training and pension costs 😀

[jamesbrown]

I think these Qs prove exactly how complex and cumbersome it will be. Qs such as eek's (why not put it into my personal account given I have paid tax on it, can the PS pay direct into my pension rather than pay me a salary etx) will inundate the HMRC helpline and they absolutely won't have thought of such scenarios . They seem to forget that most contractors think a little outside the standard box with regards to finances and most have accountants for advice.

A lot of this falls into place when you understand that the fundamental contractual relationship hasn't changed. You cannot pay someone/thing that is not party to the contract. The contract remains between YourCo and the agency or PS client. The proposal involves nothing more than a change in how IR35 is evaluated and, in response to that, a withholding tax that is administered by the client/agency. In many cases, that withholding will be hopelessly wrong, but the proposed changes are otherwise administrative in nature.

[youngguy]

A lot of this falls into place when you understand that the fundamental contractual relationship hasn't changed. You cannot pay someone/thing that is not party to the contract. The contract remains between YourCo and the agency or PS client. The proposal involves nothing more than a change in how IR35 is evaluated and, in response to that, a withholding tax that is administered by the client/agency. In many cases, that withholding will be hopelessly wrong, but the proposed changes are otherwise administrative in nature.

The added confusion and possible plethora of Qs comes from how Gov are attempting to implement this and do the withholding.

Their easiest way would have been to declare Gov contracts as inside at point of approval. As you said, the collection of taxes would therefore be easy and fall under everyone's current understanding.

The collection of such taxes from the end agent creates the Qs about treatment, changes to terms in contracts(eg the wording in clone contracts will have to change) and then leads to the kind of ingenuity Eek has come up with plus the 'tax me an employee, give me rights' argument.

It may turn out to be merely administrative changes , but those changes affect agents, contractors and accountants in a potentially big way