MPs vote down bid to delay IR35 reforms, press ahead with new tax rules

[DolanContractorGroup]

MPs have voted against an amendment to the Finance Bill which set out to delay changes to IR35 legislation for off-payroll working, a subject close to the heart of many IT contractors.

Speaking for an amendment he tabled, David Davis, backbench MP for Haltemprice and Howden, said delaying the introduction of the legislation from 2021 to 2023/24 was essential given the likely long-lasting economic impact resulting from the COVID-19 pandemic.

"We need that time to actually understand precisely what the effect of a new policy will be," he told MPs last night. "It will be a disaster within the context of the economic crisis and the growing gig economy. The government has accidentally created that class of zero-rights employees: no holidays, no sick pay, no pension, no redundancy, no employment rights, whatsoever. We must stop that happening, either accidentally or deliberately."

The reforms to the IR35 rules make large and medium-sized businesses responsible for determining the employment status of contractors for tax purposes, rather than the contractors themselves doing this. The rules are designed to make contractors deemed to work as permanent employees pay similar income tax and national insurance contributions. The measure came into effect in the public sector in 2017.

Brit MPs vote down bid to delay IR35 reforms, press ahead with new tax rules for private-sector contractors • The Register

[saptastic]

Yes

Government trounces Loan Charge and IR35 amendments, clearing the path for September and April enforcement

Just hope employers think about fair and correct implementation

[DolanContractorGroup]

*Clients

Small, but important distinction.

[northernladuk]

Just hope employers think about fair and correct implementation

[Paralytic]

Just hope employers think about fair and correct implementation

That ship has sailed and is already half way around the world.

[elsergiovolador]

Yes

Government trounces Loan Charge and IR35 amendments, clearing the path for September and April enforcement

Just hope employers think about fair and correct implementation

Why would they open themselves to liability for incorrect status determination? If you read HMRC guidance almost every role one way or another qualifies inside IR35. I think there will be a boom for advisers ensuring the contracts are inside IR35 and cannot be disputed.

[JamesBrown11]

Extremely disappointed with yesterday's vote, but with strong gov majority the result was to be expected.

Future looks increasingly grim. 90% of roles will be inside IR35 eventually, with no rate increase to offset new tax. Few remaining outside gigs will be getting 10x as many applications, making them impossible to get. Also the rates for those outside gigs will go down (by a lot) due to significantly increased supply. Everyone will be wanting them.

With remote work being new normal, we have also lost one of our key advantages, mobility. Now we have to compete with people from all over the world. Near- and off-shoring is now even more attractive to clients. Why would they pick an expensive UK contractor who works remotely over someone from East Europe or Asia (India) who also works remotely, but quotes 3-5x less? This will also increase supply significantly and drive rates way down.

I was watching yesterday's vote with 5 of my contractor colleagues. One already decided to leave UK permanently in 2021. Two of them will start consultancies in cheap countries like India and try to steal UK gigs by low-balling. Other two guys think of getting ER, closing shop and going PAYE in 2021. No one really believes that rates will increase, if anything, as I said above, rates will go down, way down.

Personally, despite all this, I will keep pushing through. Contracting is a lifestyle and I just can't see myself doing perm 9-5 job with some psychopathic micromanager breathing down my neck, with maybe £200 worth of benefits a year, limited time off and office politics BS. I have already reduced living costs to an absolute minimum in preparation for things to come. I'm also actively looking into moving PSC to another country. Really short-sighted decision by UK gov but it is what it is.

What are your plans for 2021?

[Scruff]

...What are your plans for 2021?

Plan for Exit with Brexit...

[Lockhouse]

Extremely disappointed with yesterday's vote, but with strong gov majority the result was to be expected.

Future looks increasingly grim. 90% of roles will be inside IR35 eventually, with no rate increase to offset new tax. Few remaining outside gigs will be getting 10x as many applications, making them impossible to get. Also the rates for those outside gigs will go down (by a lot) due to significantly increased supply. Everyone will be wanting them.

With remote work being new normal, we have also lost one of our key advantages, mobility. Now we have to compete with people from all over the world. Near- and off-shoring is now even more attractive to clients. Why would they pick an expensive UK contractor who works remotely over someone from East Europe or Asia (India) who also works remotely, but quotes 3-5x less? This will also increase supply significantly and drive rates way down.

I was watching yesterday's vote with 5 of my contractor colleagues. One already decided to leave UK permanently in 2021. Two of them will start consultancies in cheap countries like India and try to steal UK gigs by low-balling. Other two guys think of getting ER, closing shop and going PAYE in 2021. No one really believes that rates will increase, if anything, as I said above, rates will go down, way down.

Personally, despite all this, I will keep pushing through. Contracting is a lifestyle and I just can't see myself doing perm 9-5 job with some psychopathic micromanager breathing down my neck, with maybe £200 worth of benefits a year, limited time off and office politics BS. I have already reduced living costs to an absolute minimum in preparation for things to come. I'm also actively looking into moving PSC to another country. Really short-sighted decision by UK gov but it is what it is.

What are your plans for 2021?

That's a good summation. My current contract is up at the end of this month. If (and it's a big if) that I get renewed, then business as usual to the end of March. After that I'll MVL, take the cash and probably umbrella until I retire in a couple of years time.

[eek]

What are your plans for 2021?

What they have always been - get myself above and away from the issue

Which means selling software directly and consultancy on a packaged product basis.