Rishi Sunak confirms IR35 reform is going ahead w/o any major changes

[SouWester]

...the difference in take home pay to using an umbrella would be 13.6%

Not that I am doubting you... OK I am doubting you. I would get a quote from an umbrella comany as you may be surprised at the difference between your calculations and reality. I know I was.

Guidance on this forum is expect to take home 52-56% for day rate via umbrella. I suspect you're look at closer to 30% less...

You may not be impacted now but you might in be the future, and knowledge is useful.

[SouWester]

His relationship to Infosys is public knowledge. What would you have him declare?

You're right 'declare' is the wrong word, maybe 'address'? Anyhoo it makes no difference to anything, just me being bitter and looking for scapegoats.

I will add to my little story (before someone else does) that I didn't take the call seriously because why would they employ an 'expensive' onshore resource when they can fly someone in for peanuts?

[wiffwaffwaa]

Not that I am doubting you... OK I am doubting you. I would get a quote from an umbrella comany as you may be surprised at the difference between your calculations and reality. I know I was.

Guidance on this forum is expect to take home 52-56% for day rate via umbrella. I suspect you're look at closer to 30% less...

You may not be impacted now but you might in be the future, and knowledge is useful.

It's a good point!

But once your dividends are taxed at the higher rate of 32.5%, plus the corporation tax, you are looking at very high taxation levels within a ltd on the higher earnings.

So for contractors who take dividends not reaching the 32.5%, then yes the difference will be quite big. Once you start taking more and more of your dividends in the 32.5% bracket then the loss in earnings moving to an umbrella is still noticeable, but less so.

[Qwertyco]

How many times have you raised/written to your MP in the past few years about this ?

My MP:
Rishi Sunak!

[TupNorth]

It's a good point!

But once your dividends are taxed at the higher rate of 32.5%, plus the corporation tax, you are looking at very high taxation levels within a ltd on the higher earnings.

So for contractors who take dividends not reaching the 32.5%, then yes the difference will be quite big. Once you start taking more and more of your dividends in the 32.5% bracket then the loss in earnings moving to an umbrella is still noticeable, but less so.

Most people are being hit with the employer NI though as well which is 13.8% even on the higher rate. This combined with the 7.5% difference between dividend tax and PAYE tax and the 2% NI puts you 22.7% worse off in the higher rate tax band.

[TupNorth]

Most people are being hit with the employer NI though as well which is 13.8% even on the higher rate. This combined with the 7.5% difference between dividend tax and PAYE tax and the 2% NI puts you 22.7% worse off in the higher rate tax band.

Sorry was forgetting the 19% corp tax.

[Andy Hallett]

Not sure how HMRC can do a soft landing for this in the first year, it’s pretty binary, they either enforce it or they don’t.

The only thing they can tinker with is how harsh any penalties might be.

[eek]

Not sure how HMRC can do a soft landing for this in the first year, it’s pretty binary, they either enforce it or they don’t.

The only thing they can tinker with is how harsh any penalties might be.

Hand slaps rather than full on investigations I suspect...

[Andy Hallett]

Hand slaps rather than full on investigations I suspect...

Maybe they won’t look too hard retro, let’s face it they haven’t done that in the 20 years they have been able to. But they can’t just waive an incorrect determination if they find it.

[SouWester]

Hand slaps rather than full on investigations I suspect...

I interpret Rishi's comments as meaning they won't crack down hard on incorrect determinations post-April - pretty useless to most of us who have been blanketed. I read nothing in his comments that suggests they will go soft on pre-April (if they are actually able to do anything about it of course).

The 'suspicion of fraud' bar that HMRC set is pretty low/loose. This is HMRC's defintion of fraud: ""The general term ‘fraud’ has a wide significance and there is no simple definition which covers the full range of conduct to which it may be applied." (EM5105).

I am starting to get the hang of this jive talk.

Nothing more than idle speculation and 2 pence tho.