Reply to: Tax differences between salaried and IR35?

[GhostofTarbera]

This

When we had a sudden death in the family, I was getting text messages literally the next day, asking what my intentions, regarding my return to work on the project were ('We're just after a heads up, in case we need to replace you')

Same client, a couple of months later, one of the permies lost her elderly dad, she was off for 4 months on paid compassionate leave. There was collections, cards, 'take as long as you feel you need' . When she returned to work, everyone huddled round, asking if she was ok, and if not take more time off

Not all clients are as brutal as that but they don't owe you any 'compassion', and many simply don't care about what you've got going on, and then there's the brown envelopes coming through your door from HMRC, who care even less than the hardest of clients about what you're going through

I'd consider carefully before swapping a permanent role for contract just now, with you having much more important things to worry about, and with contracting going through it's most difficult period in memory

Best one I remember was working for RBS in Amsterdam, one of our contractor team died overnight, program director tells us to get a replacement ASAP, the body was still warm in the hotel room.

Next day one of the team posted on his facebook page - RIP etc etc

Only for his wife to call up RBS and ask where her husband was

No one had bothered to inform them




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[jk3838]

Agree, a decent compassionate employer is by far your better bet in your circumstances.
Best wishes

This

When we had a sudden death in the family, I was getting text messages literally the next day, asking what my intentions, regarding my return to work on the project were ('We're just after a heads up, in case we need to replace you')

Same client, a couple of months later, one of the permies lost her elderly dad, she was off for 4 months on paid compassionate leave. There was collections, cards, 'take as long as you feel you need' . When she returned to work, everyone huddled round, asking if she was ok, and if not take more time off

Not all clients are as brutal as that but they don't owe you any 'compassion', and many simply don't care about what you've got going on, and then there's the brown envelopes coming through your door from HMRC, who care even less than the hardest of clients about what you're going through

I'd consider carefully before swapping a permanent role for contract just now, with you having much more important things to worry about, and with contracting going through it's most difficult period in memory

[fidot]

I'm truly, truly sorry you're having to go through such a difficult thing with your mum and dad. I can't imagine how hellish tough that must be.

I would have thought that being in a permanent role might be better for your situation as your employer is probably more likely to be understanding to your situation and your need to take time off, possibly at short notice. The last thing you need at a time like this is to be stressing over work. I don't know what it is you do, but certainly in my experience contracting tends to be a bit more stressful, has more peaks and troughs, and less margin for having a life outside of it.


Take it easy and let us know what you decide.

Agree, a decent compassionate employer is by far your better bet in your circumstances.
Best wishes

[KinooOrKinog]

This is true, Im not sure if the flexibility is worth it then.
Both my parents are terminally ill and we have a bumpy road ahead, so I was looking at contracting as a way to provide more flexibility for me to roll with the punches so to speak.

I'm truly, truly sorry you're having to go through such a difficult thing with your mum and dad. I can't imagine how hellish tough that must be.

I would have thought that being in a permanent role might be better for your situation as your employer is probably more likely to be understanding to your situation and your need to take time off, possibly at short notice. The last thing you need at a time like this is to be stressing over work. I don't know what it is you do, but certainly in my experience contracting tends to be a bit more stressful, has more peaks and troughs, and less margin for having a life outside of it.


Take it easy and let us know what you decide.

[ladymuck]

Sorry to hear about your parents.

If you have plenty of cash behind you and are looking to top it up while helping to care for your parents then freelancing to work on small distinct projects for clients may be good for you. A permanent job would possibly provide more support though if you were able to take compassionate leave at times, or even use your holiday allowance. At least that way you'd still be getting some income when not actually working.

That's some sound advice there.

You do need to look at your financial position and be sure you can afford to be out of work, both when you need to be and if there is no work available.

Some clients may be less accommodating about your need to be away from their precious project than an employer would. It can be quite unforgiving at times, with some clients' expectations being really quite high.

[Pring]

This is true, Im not sure if the flexibility is worth it then.
Both my parents are terminally ill and we have a bumpy road ahead, so I was looking at contracting as a way to provide more flexibility for me to roll with the punches so to speak.

Sorry to hear about your parents.

If you have plenty of cash behind you and are looking to top it up while helping to care for your parents then freelancing to work on small distinct projects for clients may be good for you. A permanent job would possibly provide more support though if you were able to take compassionate leave at times, or even use your holiday allowance. At least that way you'd still be getting some income when not actually working.

[BlueSharp]

Ok thanks. So the reason most people do contracting is because it pays more? I was not aware, I thought it was for the flexibility. Sorry like I say, totally new to this. My reasons may be different to other peoples I suspect.

You get the flexibility to pick and choose projects that you work, if one does turn out to be a death march you can walk away. Also it keeps you out of the politics of the office. The extra pay is because we offer a premium over what employee's do. Vast experience in our domain and can hit the ground running and happy to travel. That premium also comes at a premium price!

However, Inside IR35 has stopped all that, the inside IR35 position means holiday, sick pay, pension, bench time, travel/overnight expenses have to be funded post tax not from a war chest (savings) in the Ltd. So for many the reward/risk as now swung back to being a permie.

People on here are questioning why you would go from permie to a no rights temp worker position but taxed as such situation. Many are going the other way!

[andydd68]

The flexibility to quit my job whenever I want. Is that not why people go in to contracting?
I guess everyone has their different reasons.

Ha..yes..its a nice thought that in the back of your mind you can just tell your client to F off..the reality is, can you afford that ? (unlikely), and whilst not as serious as leaving/getting fired from a job youve had 20 years, you really do not want to burn your bridges with clients/agencies nor get a bad reputation.

Ive been contracting for 6 years or so and the law regarding tax/ltd cos is an absolute minefield and I suspect not even senior/experts here have a full understanding of it, you will need an accountant which will take more money out of your pocket on top of bank charges/accounting software/indemnity insurance.

Anyway most of this is moot and many/most of us are finding out..contracting/being paid through a ltd company will become almost impossible, many thousands of contractors have now closed their ltd cos as they serve no purpose and resigned to the fact it will be umbrellas going forward.

[andydd68]

Hi everyone, I am about to take my firt step in to contracting and am looking at the ins and outs of the tax stuff.
I have a limited company and I see seasoned contractors talking about IR35 reforms.
I have been a perm worker paying a higher rate of tax. I am taking a 1 year contract (paid daily) which falls within IR35, where I will be earning the same yearly total in the contracting role as I do in my permanent role.
My question is will IR35 and paying employers NI contributions leave me worse off than if I was in the perm role??

Thanks

As already mentioned...are you mad ?, now is not the time to start contracting, I suppose after April and the dust has settled maybe a better time as you will at least an idea of where you stand (almost certainly worse off).

[sayinghello]

Ok thanks. I think maybe I'm getting contracting confused with freelancing.

[eek]

This is true, Im not sure if the flexibility is worth it then.
Both my parents are terminally ill and we have a bumpy road ahead, so I was looking at contracting as a way to provide more flexibility for me to roll with the punches so to speak.

Contracting won't give you that flexibility - companies are paying a premium for someone to fix an urgent problem for them.

I don't know what to advice but contracting is really not the solution for your current issues.

[sayinghello]

No because a contract can evaporate in a day and you earning nothing. It can take a couple of months to get a new gig etc.

Work on nine to ten months contracting a year and use that to compare to your perm wage. Starts to look less attractive.

No sick, pension, holidays for free either.

This is true, Im not sure if the flexibility is worth it then.
Both my parents are terminally ill and we have a bumpy road ahead, so I was looking at contracting as a way to provide more flexibility for me to roll with the punches so to speak.

[sayinghello]

Not quite - as you could be fired at any minute and possible asked to take a few weeks off at little notice due to the department having a "quiet period".

Even in the good old days there is no way that we would tell you it was worth going contracting unless you were getting 40%+ more than you got being permanent (and ideally 80%) - going contracting today for the same money as you got in a permanent job is currently completely and utterly insanely stupid.,

Ok thanks. So the reason most people do contracting is because it pays more? I was not aware, I thought it was for the flexibility. Sorry like I say, totally new to this. My reasons may be different to other peoples I suspect.

[eek]

The flexibility to quit my job whenever I want. Is that not why people go in to contracting?
I guess everyone has their different reasons.

You won't last long if you quit jobs when you feel like it - your reputation will proceed you.

Beyond that we've already told you this is an insane time to go contracting so please don't come back here in six months time complaining about things not working out.

[sayinghello]

What flexibility are you expecting from contracting exactly?

The flexibility to quit my job whenever I want. Is that not why people go in to contracting?
I guess everyone has their different reasons.