Does anyone else feel like they are being financially ripped by the tax-man

[webberg]

and HMRC takes more than half of it.

.

I suggest that's not true.

£120k a year (day rate just north of £500) produces tax of around £45.7k (38.1%) and employee NIC (at employee rates) of £15.387 for a combined deduction of 45.1%.

So you get 55%.

I suspect you are conflating em'er NIC into this?

[BrilloPad]

I beg to differ. IR35 is punitive, and unfair. We receive cash in lieu of employment rights. Employees receive employment rights tax-free. IR35 forces us to pay punitive tax on the cash-in-lieu.

That tax includes ERNI at 13.8%, EENI at 2% (since for almost all of us we're over the threshold, and Income Tax at 40% or more for most of us, possibly even 60% for those between 100-120K.

So employees get employment rights and pay no tax for the privilege. If we're under IR35, we get no employment rights but instead get cash -- and HMRC takes more than half of it.

That certainly is punitive.

You were paid more for your contract than for being permanent. You want to have your cake and eat it.

Tax evaders. Pay your fair share.

[WordIsBond]

It's painful but they're not punishing you now;

I beg to differ. IR35 is punitive, and unfair. We receive cash in lieu of employment rights. Employees receive employment rights tax-free. IR35 forces us to pay punitive tax on the cash-in-lieu.

That tax includes ERNI at 13.8%, EENI at 2% (since for almost all of us we're over the threshold, and Income Tax at 40% or more for most of us, possibly even 60% for those between 100-120K.

So employees get employment rights and pay no tax for the privilege. If we're under IR35, we get no employment rights but instead get cash -- and HMRC takes more than half of it.

That certainly is punitive.

[Cirrus]

the facts above may bring things into perspective.

He's read your post and more: he's liked you. I can't believe he understood what you said.

[webberg]

At the end of the day, the politics matter little. Governments of all colours have seen the contracting world as a potential source of tax revenue and one, moreover, that can be raided with impunity as HMRC's PR machine cranks out the "tax avoider" lies.

The fact that you may earn, 4, 5, 6 or more times the average salary will always be seen by some as the luck of the draw or the fact that you are married to the bosses cousin's auntie or whatever. Again, it doesn't really matter.

The wheel has turned and for a time at least you have to accept a number of changes which include paying more tax and keeping less of what you earn.

The alternative is to be sucked into a situation in which the false promises of those flogging tax saving schemes start to look attractive and you use one of their shoddy products. If you do, I guarantee that the net cost to you will increase. And have an additional dose of emotional rollercoaster.

In your own judgement this may be "wrong" or "unfair" or "penal". You may consider it a deliberate attack on you, your industry, your social class. You may well be right. Equally, there will be others who have bought into the HMRC PR machine message and you may as well spit in the wind for all the good it will do you trying to convince them otherwise.

You will at some time get over this sense of injustice (reasonably held or otherwise) and move on. Why not start now?

[Jolie]

You do realise that the IR35 changes and all this mess are all due to the right-wing and so called entrepreneurial-friendly Tories' legislation / laws, right?

While I do agree with much of what BrilloPad has said, you need to go and look at the history of how IR35 came about.

[BrilloPad]

You do realise that the IR35 changes and all this mess are all due to the right-wing and so called entrepreneurial-friendly Tories' legislation / laws, right?

You are just so wrong. What is it with posters here?

It does not matter who is in government. They report to HMRC.

Take David Gauke....

Gauke on DTA 2008
-----------------
The retrospective nature of the clause is deeply troubling. We fully share the Government’s concern about the issue that it is trying to address. There is a problem with the arrangements and it is perhaps more than just a kink in the system, as the Economic Secretary put it. Trading profits derived from UK land are being received tax free by UK residents and domiciled individuals because of schemes involving the establishment of offshore trusts, specifically in the Isle of Man.

The existing legislation appears to deal with the issue where the UK residents or domiciled individuals are partners in the relevant offshore funds, but it does not seem to work where the partners are trusts and the UK individuals are benefiting from the arrangement. There is not a problem with trying to address that point, but there is a point of principle here. The proposal essentially states that the amendments contained in the clause are to be treated as always having had effect. Either the law exists or it does not. It is troubling when the Government state that the law in the past is something because that is what they say it is now. That is essentially what subsection (4) states.

This is partly an issue of simple democracy. It raises issues about EU law and legitimate expectations. I shall not pursue that point, but the hon. Member for South-East Cornwall is right to raise it. In part, it cuts to the question of the certainty and stability of the UK tax system. For investors, the idea that UK tax law is likely to be changed retrospectively is unattractive, and the UK is, for various reasons, acquiring a reputation for having an uncertain and unstable tax system, which is bad for the UK economy.

Gauke on DTA 2012
-----------------
Laurence Robertson (Tewkesbury, Conservative)
To ask the Chancellor of the Exchequer how many people had to pay additional tax following the coming into force of section 58(4) of the Finance Act 2008; and if he will make a statement.

Hansard source (Citation: HC Deb, 18 June 2012, c723W)

David Gauke (Exchequer Secretary, HM Treasury; South West Hertfordshire, Conservative)
UK residents are taxable on their worldwide income wherever it arises—including situations where it arises by way of foreign partnerships. Section 58 of Finance Act 2008 was enacted to help put that beyond doubt and in so doing, made clear that a wholly artificial tax avoidance scheme involving a foreign partnership comprised of foreign trustees did not work. As section 58 retrospectively clarified existing legislation, its introduction had no affect on any taxpayers' tax position.

--------------------------------------------------------
When will posters here get this?

[CosmicWave]

The majority of the British people see us as tax dodgers and particularly with the more left wing amongst us, they believe in communist values that we should all be at the same level. Hate, jealousy and bitterness.

You do realise that the IR35 changes and all this mess are all due to the right-wing and so called entrepreneurial-friendly Tories' legislation / laws, right?

[BrilloPad]

The Loan Charge should give you enough warning signs.

2008 was the real warning - the wring was very clearly on the wall then. However LC should have re-inforced that - 7 suicides so far.

HMRC have got much further to go yet though.

[Jolie]

Also thanks to Jolie and escapeUK for your input and support - I couldn't understand the attacks and how comparing someone on £15k to those earning more - it wasn't handed to us on a plate and like you've said - we've worked bl**dy hard to get to where we are, a lot of sacrifice is made, esp those of us with families, it gets a lot harder trying to keep up with the latest tech and still maintain a semblance of family life.

The majority of the British people see us as tax dodgers and particularly with the more left wing amongst us, they believe in communist values that we should all be at the same level. Hate, jealousy and bitterness. Those earning £15K in a dead end job will be doing so for the rest of their lives, because they know nothing different and have no motivation, desire or energy to do something about it, and they sit there moaning and whining like a banshee that it's not fair, even though many of them smoke, have an iPhone (that they wouldn't have had if it weren't for entrepreneurs prepared to take risk), watch Netflix and eat takeaway, go figure!

If it is better that I should leave now, as previous posters have said, I don't think I've come across articles that reflect the same view. Most seemed to have cited HMRC - twice stated - advice that it won't go after previous years. Is there any tax or ir35 professional articles that suggest the same course of action. While I respect and value your advice and it certainly has me now reviewing my options, the same advice needs to come from a professional source. I'll try and contact a few more ir35 tax professionals to gauge what they think I should do going forward.

The one thing I agree with every other poster on this thread is that it's time to leave, now!

The Loan Charge should give you enough warning signs. Listen to the advice of people who have been caught before and are going through years of pain now.

The short term pain you will experience in finding another position, taking a lower income, adjusting to new working practices etc far outweigh the comfort of continuing and then being hammered with a 6 figure tax claim. Is that a risk you are prepared to take?