How much "reduction" in earnings did the April changes create

[VectraMan]

I agree - technically it shouldn't be my problem, but if I lose a contractor just because of it and I have to scramble for my project not to get hurt, then it becomes my problem.

Well yes, but you're not losing a contractor because of this, you're losing a contractor because he's decided to ask for a higher rate. We do that, and you response should be exactly the same as any other time a contractor wants to put his rate up (which is "yes - take however much you like" ).

Put it this way: he's not worth more because he's being taxed as an employee than a Ltd. company contractor with identical skills and experience.

[vetran]

Overall its his problem, I don't get a rise if my council tax goes up, but you want to keep him.

Find out what he is worth in the market ring round the pimps and check a few ads if there is reasonable slice for the agency e.g. if he could get £300 a day and you are paying £400 to the agency then you are OK. If you aren't then you need to up the rate.

Possibly mention the raw market rate for his contract if he moans again, if he smiles and says he's getting more than that then its his problem. If he looks anguished and says I wish I got that, then point him towards the agent and you can act surprised as you assumed the agency was paying him that. If he's angry he will probably tell you his rate. Don't let on what you are paying.

If you find the agent is shafting him then make it clear to them if he goes they are unlikely to get a shot at the replacement.

He should be doing this himself and pushing the agent.

[iphigenie]

I agree - technically it shouldn't be my problem, but if I lose a contractor just because of it and I have to scramble for my project not to get hurt, then it becomes my problem.

Still, glad that the consensus so far is that indeed my employer is not the one who should have to foot the bill.

The recruitment agency that provided several of the contractors is Computer People and i am not impressed (they even lied to my face about several things, which is never good. Not using them again, thats for sure, and will try recruiting via forums and web/paper next time).

All the contractors provided were sent by CP to Giant - whose reputation is less than stellar. My advice is going to be sack the umbrella and see what a real one can do for you, or better yet get a good accountant and use the limited company you have...

PS: I am amazed to see that another one of my contractors has just posted a rant about Giant and them messing up the tax code. I will check with the other one if this is also part of his problem. How can you mess up a tax code, though, I wonder. I am a 2 man band and I have learned enough to run a payroll system properly!

PPS: to the person who posted the first response, I am afraid to say that this here company does not fall under corporation tax so is hit like most of us contractors - dont assume all employers are large cash cows

[VectraMan]

Regardless, however a contractor manages his tax is of no concern of the "employer".

[bangface]

PS: the agency and the umbrella company involved have so far been a lot less than impressive - including lying to us and making excuses etc. I suspect it is not ok to name-and-shame in this forum so I will abstain.

As malvolio has already said it sounds like he's gone from an MSC to an Umbrella!!

I think you should still tell us who the agency and umbrella are though, particularly if both outfits are offering a poor and dishonest service!!

[TheFaQQer]

Sounds to me like it's a great excuse for blaming the government to ask for a rate rise. Worth a try!

I'd like a 25% rate increase as well, but I'm not going to get one, but maybe his feeling is that it's worth chancing a good increase.

[Bluebird]

yep sounds like the new legislation has bitten him in the bum...


Have to say, that there has been a lot said about this new legislation since November of last year, so that to come in May and start complaining that "I'm not taking as much money home as I uesed to" tells me the contractor isn't as clued up about things as you'd like to think.

My advice to him would be - you've had a few years making hay, now you have to pay tax like any other employee..

[Ardesco]

have to agree with Mal here. If he gets his own LTD and take dividends he will find that he is earning the same as before. Hell this may even be a way for him to bump up his wage before switching to LTD in an attempt to get a 25% pay rise. (The cynic is strong in me today )

[tino]

Perhaps. But since I have run my own company from Day 1, I have little sympathy for people who claim the same benefits while expending no effort. I have even less when they try to get a pay rise on the back of something they have control over and that is entirely their own problem to resolve.

You are of course absolutely correct. I used a brolly until I found out about this site and then seen how easy it was

[malvolio]

Scathing as ever Malvolio

Perhaps. But since I have run my own company from Day 1, I have little sympathy for people who claim the same benefits while expending no effort. I have even less when they try to get a pay rise on the back of something they have control over and that is entirely their own problem to resolve.

[tino]

Sounds like he's gone from MSC to Umbrella and is now paying the same tax as everyone else. That doesn't justify a rate rise, his remedy is to stop pretending to be a business and get his own company. Since April, you only get the tax benefit of being a risk-taking company if you actually are one

So tell him to go learn his trade properly and stop sponging off everyone else.

Scathing as ever Malvolio

[malvolio]

Sounds like he's gone from MSC to Umbrella and is now paying the same tax as everyone else. That doesn't justify a rate rise, his remedy is to stop pretending to be a business and get his own company. Since April, you only get the tax benefit of being a risk-taking company if you actually are one

So tell him to go learn his trade properly and stop sponging off everyone else.

[dang65]

But frankly my gut feeling is that it is not us, the employer, who should be footing that bill...

Why not? I seem to recall that corporation tax was reduced at the same time as small company tax was increased. Seems only fair to pass that windfall on to those who have lost out.

[iphigenie]

Hi

I am a consultant/contractor (tech. executive), and have always run it through my own limited company, sometimes using agencies as intermediaries, sometimes not. So I know nothing about umbrella companies and other service agencies.

In the contract I am in one of the contractors I manage (hired before I was on board) just came to me saying that since April his real income has dropped by 20-25% and he needs an adjustment asap.

To me this means that the employer is still paying the same amount, but the cut that the agency, umbrella company and the government are taking has increased.

* it could be temporary (or permanent) PAYE adjustments?
* it could be the umbrella company covering their risks and increasing their cut on the sly
* it could be the agency increasing their cut on the sly

Obviously without sitting with the contractor and looking at what he receives on his end (something we're technically not supposed to do but is that legally enforcable?), it is hard to advise him, but I suspect it is the umbrella company and they should be kicked/dumped.

But frankly my gut feeling is that it is not us, the employer, who should be footing that bill (especially since it seems that this company has never negociated with the recruiters and is paying totally silly percentages). I don't want to lose the contractor and I dont want him to suffer but I don't want the employer here to be taken for a ride.

Mostly I wanted to know
a) if others have experienced the same thing
b) what they did about it
c) am i toeing a thin line if I sit with him and review his payslip documents to help figure out if it is temporary or permanent, and if it is increased tax or the umbrella paying him less?

Thanks

PS: the agency and the umbrella company involved have so far been a lot less than impressive - including lying to us and making excuses etc. I suspect it is not ok to name-and-shame in this forum so I will abstain.