Results of the public sector consultation is up

[eek]

I'm currently in a contract at an University. The department head ensured all contractors that regardless what happens come April 2017 we are not going to be left "out of pocket" and if the upcoming legislation deems us inside IR35 the rates will be adjusted to mitigate the added cost keeping us at the same level of take home pay as before. Whether or not they are capable of doing the correct calculation for everyones circumstances is irrelevant. The important bit is they are ready to foot the PAYE/NI bill as is.

Now imagine if they have a choice on the matter to declare us outside and save all the extra cost on the spot while making their contractors extremely happy to stay on. Worst case scenario somewhere down the line HMRC knocks on their door asking for the PAYE/NI, they will pay it regardless.

Being declared inside on April 1st may subject you to HMRC retrospectively looking at the rest of your contract (prior to April 1st) and chasing you for money....

Unless he's prepared to state you are outside and stand by that decision I wouldn't (personally) be staying....

[eek]

Have they even addressed double tax relief ? So you're going to be paying 40% income tax on your turnover already, so ... what .. the remainder becomes your new turnover .... on which you pay corporation tax, income tax in your company salary and dividend tax on your dividends. I don't think there's any cash left over there ?!

What corporation tax? what dividends? The company income will become £65,000 post-tax salary to be paid out by the company. The company won't be making any profit its just a money transfer mechanism....

[seeourbee]

I don't understand your post - you're saying the company turnover is £65k ? Without any deductions the company then pays corporation tax on the £65?

[sal]

Being declared inside on April 1st may subject you to HMRC retrospectively looking at the rest of your contract (prior to April 1st) and chasing you for money....

Unless he's prepared to state you are outside and stand by that decision I wouldn't (personally) be staying....

Exactly, I know that and not going to stay if declared inside IR35. Not to mention that as I have a non-working wife who is a shareholder they can't possibly get the level of take home pay right.

My contract is up for renewal in February, by that time it will be mostly clear what will happen come April. Unless my contract is declared outside IR35, there is snowball in hell chance of me extending past March.

[mudskipper]

Draft legislation for those that are that way inclined (i.e. james.brown!)

https://www.gov.uk/government/public...view-documents

[sal]

I don't understand your post - you're saying the company turnover is £65k ? Without any deductions the company then pays corporation tax on the £65?

Salary comes from pre-tax, so YourCo have £65k income and £65k paid in salary(es) = 0 profit = 0 CT bill

[eek]

I don't understand your post - you're saying the company turnover is £65k ? Without any deductions the company then pays corporation tax on the £65?

Not quite. Under the CIS rules your company receives the money with all taxes already deducted. The company's only job is to transfer that taxed income to you as your pay.

Hence contract £110,000. income tax and NI withheld (say £45,000 I know its wrong its just an exampled). Your company receives £110,000-45,000= £65,000. As that income has already been taxed it can be paid directly to you as income.

So company profit = £0 (everything came as income), dividends possible from profits £0 (as the company hasn't made a profit),

[seeourbee]

Results of the public sector consultation is up

But it hasn't paid any salary yet, that's my point. Or maybe we just don't know the mechanics yet. Your company is going to recieve invoices net of tax. That is NOT the same thing as your company paying you the gross as salary. That's what I mean by there is some double tax detail missing so far.

[seeourbee]

Ok just read your previous post (posted at same time as me). Is that what they do in CIS ? News to me , then yes those mechanics make sense

[eek]

But it hasn't paid any salary yet, that's my point. Or maybe we just don't know the mechanics yet. Your company is going to recieve invoices net of tax. That is NOT the same thing as your company paying you the gross as salary. That's what I mean by there is some double tax detail missing so far.

Your company is receiving your salary net of tax. It can then either pay that money directly to you or keep it (albeit that's a bit pointless as tax has already been paid on it so it may as well go into your personal bank account).