What's changed - FAQ

[SueEllen]

Yes we do get po's my manager raises PO's for us, which grants us 6 months contracts, so unfortunately not for specific work, but we are encouraged to invoice against certain projects.
We have to put the PO number on our invoices.

Some of us are billing directly some are going through agencies.
I gather either the University will blanket everyone whether direct or not, or we may get lucky.

So weird with Universities as well, I know they are officially public but in the finer detail they are not really public and are run like normal co's.

Unfortunately as each PO isn't against an individual project but in fact a contract then you are stuck in the same boat as those going by agencies. The examples given in the information released so far make it clear if each piece of work is single and discrete then you would be outside the new regulations.

[teapot418]

[
Pensions

If you are contributing large amounts into a pension your pension contributions will be from your post salary income not direct from your company. That means that all contributions are going to be 15-25% smaller due to National Insurance being deducted prior to it being paid into your pension. If you pay a lot into a pension you need to seriously decide on whether it would be better to use an umbrella company and pay into your pension using Salary Sacrifice.

You will also have to use self assessment to reclaim the higher rate income tax proportion of any pension contributions see https://www.aegon.co.uk/support/faq/...ef-pp-faq.html for some details

Probably should point out that the treatment of pension contributions is a best guess at this stage.

[b r]

This came out of my OH's agency in response to another contractors questions:

The proposed legislation is still at the consultation stage so until we receive formal guidance we are unable to advise. You will not be the only contractor in this position in regards to payment for March work come April. <note: they won't bring forward the payment date from the 10th April>

Until x have confirmed and <agency> has stated their stance I cannot make these amendments. We will amend appropriately once confirmation has been received but we are unable to make the amendment right now

The client will receive communication from ourselves in relation to IR35 changes and the outcome for their contractors.

I appreciate your concern but we will do all we can to ensure your needs are suitable met after the consultation period.


So basically the 9 contactors (all from the same agency) are handing in their notice a month early (contracts run to end March) to ensure they don't get caught with a post 6th April payment.

Agency (and one of the largest in the UK) seems to:
a: have no plan
b: leaving it to each local office

Unreal.

[DaveB]

This is the most helpful thread I've found on all of this so, firstly, thank you for all your time spent giving info.

I am an NHS Manager normally working as a contractor/interim with the NHS via an agency (so my contract is with the agency, who in turn have one with the NHS). At present this works well and I move around depending on where the work is. Typical day rate would be £450 and, leaving aside the VAT, I get this into the company account, leave aside the Corporation Tax, and pay myself minimum salary and rest in dividends (with the latter also taxed after a threshold).

My NHS end-client is, as you'd expect, bemused by all this and no doubt will employ a blanket decision like TfL.

I know you are going to post more information, but for now my only question is re corporation tax. If I carry on post-March '17 with a new contract with slicker wording from the agency, my understanding is that NI and PAYE taxes are collected and I receive the net of this into the company account. This would now be regarded as 'salary' and so payable directly into my personal bank account (no more dividends or dividend taxes). But what about the corporation tax? If I am still getting this 'salary' via the ltd company, will the CT still be due too? 20% is massive.

No, your (strictly your ltd co.'s) CT bill will be £0 (assuming the company has no other form of income). CT is charged on profits after costs. Salary is a cost and is deducted from profits before CT is calculated. Since the entire income to the company is paid out in salary there are no profits to be taxed and no CT to pay.

[runandbecome]

No, you're CT bill will be £0 (assuming the company has no other form of income). CT is charged on profits after costs. Salary is a cost and is deducted from profits before CT is calculated. Since the entire income to the company is paid out in salary there are no profits to be taxed and no CT to pay.

This is what I was trying to work out.
For some of us zero corp tax could be not too bad compared to the current situation.
For people like me who don't travel too much, I spend a bit on eqpt.

I am trying to find somewhere where I can make calculations as to what I may recieve if the new rules apply.

Currently £360 a day

Take home between me and wife with Salary Dividends is about £5500

My Corp tax bill last year was about £15k so I am trying to calculate difference.

Then the other question is what becomes of the company, do you stop billing through that and just get an umbrella?

[cojak]

This is what I was trying to work out.
For some of us zero corp tax could be not too bad compared to the current situation.
For people like me who don't travel too much, I spend a bit on eqpt.

I am trying to find somewhere where I can make calculations as to what I may recieve if the new rules apply.

Currently £360 a day

Take home between me and wife with Salary Dividends is about £5500

My Corp tax bill last year was about £15k so I am trying to calculate difference.

Then the other question is what becomes of the company, do you stop billing through that and just get an umbrella?

Use this to calculate: Umbrella Calculator

[eek]

Probably should point out that the treatment of pension contributions is a best guess at this stage.

Not really. The best option for pensions is salary sacrifice and you can't do that if the agency is paying employers NI unless they are willing to pay directly into your pension instead.

Now if a financial advisor is willing to give me advice that differs from the advice I've already received I'm happy to change it but until then I will leave it as it is

[Andy Hallett]

This came out of my OH's agency in response to another contractors questions:

The proposed legislation is still at the consultation stage so until we receive formal guidance we are unable to advise. You will not be the only contractor in this position in regards to payment for March work come April. <note: they won't bring forward the payment date from the 10th April>

Until x have confirmed and <agency> has stated their stance I cannot make these amendments. We will amend appropriately once confirmation has been received but we are unable to make the amendment right now

The client will receive communication from ourselves in relation to IR35 changes and the outcome for their contractors.

I appreciate your concern but we will do all we can to ensure your needs are suitable met after the consultation period.


So basically the 9 contactors (all from the same agency) are handing in their notice a month early (contracts run to end March) to ensure they don't get caught with a post 6th April payment.

Agency (and one of the largest in the UK) seems to:
a: have no plan
b: leaving it to each local office

Unreal.

To be fair there will be differing levels of knowledge at all agencies and end clients. Consultants won't always know the detail

This close to the event though, the amount of pennies that haven't dropped across clients, agencies and contractors is simply stunning.

We are committed to supporting PSC's both inside of IR35 and those who are genuinely able to operate outside. We've had quite a proactive approach to this change and have picked up more business than we've lost from contractors and clients, simply because we have a reasonable understanding and are not sticking our heads in the sand.

[runandbecome]

To be fair there will be differing levels of knowledge at all agencies and end clients. Consultants won't always know the detail

This close to the event though, the amount of pennies that haven't dropped across clients, agencies and contractors is simply stunning.

We are committed to supporting PSC's both inside of IR35 and those who are genuinely able to operate outside. We've had quite a proactive approach to this change and have picked up more business than we've lost from contractors and clients, simply because we have a reasonable understanding and are not sticking our heads in the sand.

Yes I too am amazed at how few are aware of this change. In the University I have mentioned, not one other contractor is discussing it, those that I point to these forums are pretty nonchalant.
By the calculation if I am forced to go umbrella I'll be around £1200 worse off a month.
I think the wife and I may then classify in Theresa Mays JAM category.
Glad you are keeping abreast of this Andy I think you and your agency may be one of the very few that will be able to give decent advice as many others are ignoring the situation.

[NHS1979]

No, your (strictly your ltd co.'s) CT bill will be £0 (assuming the company has no other form of income). CT is charged on profits after costs. Salary is a cost and is deducted from profits before CT is calculated. Since the entire income to the company is paid out in salary there are no profits to be taxed and no CT to pay.

Thanks that's very helpful. It's hard to even get my accountant to understand my dilemma - he thinks I can just forget the public sector, but that really is my specialism so I just need to find the least damaging solution post-March. Noone seems able to tell me how much worse off I will be than my current situation - my own calculations seem to differ from the contractor umbrella, mainly because I am too stupid to know what % tax I would pay! But it looks like a 39% drop if I switched to the NHS payroll, a 28% drop if I stay as is via an agency but under IR35, and a 26% drop if I switch to an umbrella company. Grim, but I'm lucky I don't travel much so no expenses.