Reply to: Conservative Conference IR35

[eek]

Interesting. I looked it up and I'd argue there's an opening to interpretation there.

You could say that an employee's gross salary includes employer's NI and it is deducted from their pay. However, convention is that it is a tax on employment and so is hidden from view, per Dominic's comment.



https://www.gov.uk/payslips

That's why umbrellas give you both a pay slip and a payment summary.

The summary should explain how they got to the gross pay from the umbrella / assignment fee they received. I.e. what they did with

1) the umbrella's margin
2) holiday pay
3) Employer NI
4) Apprenticeship levy.

And as we continually point out if you don't see separate lines for those items ask what are they hiding.

[ladymuck]

Because it's not their business to know? ISTR that the contents of a payslip are defined in legislation, and must show all the deductions from the employee's gross pay (which is also shown). However that gross pay is exclusive of ERNICs of course.

Interesting. I looked it up and I'd argue there's an opening to interpretation there.

You could say that an employee's gross salary includes employer's NI and it is deducted from their pay. However, convention is that it is a tax on employment and so is hidden from view, per Dominic's comment.

Your payslip must show:

• your earnings before and after any deductions
• the amount of any deductions that may change each time you’re paid, for example tax and National Insurance
• the number of hours you worked, if your pay varies depending on time worked

https://www.gov.uk/payslips

[ladymuck]

eek & LM are on to something here, which is overhauling the whole tax system.

Income Tax
National Insurance
Dividend Tax

Roll them all up in to "Earnings tax" that kicks in at, say £15k (15%), increases at £50k (25%), again at £100k (40%), £200k (50%) and maybe others at £500k and above.
It applies to all funds received (including offshore and trusts), and by including the offshore funds, you'll find a lot more tax coming in.

Then change the corporation tax rules, so they effectively include employer NI. They either need to be based on profit, turnover, number of employees, or a combination of the three. They should also apply to the corporate structure, so if it there are multiple shell companies, the tax is paid rather than having profits syphoned off to a tax have.

[Chris Bryce]

eek & LM are on to something here, which is overhauling the whole tax system.

This is actually what's needed and many prominent (and not so prominent) experts have been saying so for years.

Unfortunately, and, yes, this is cynical, there are perhaps too many high-end accountants and tax lawyers who'd take a large revenue hit so lobby against this approach.

[WTFH]

eek & LM are on to something here, which is overhauling the whole tax system.

Income Tax
National Insurance
Dividend Tax

Roll them all up in to "Earnings tax" that kicks in at, say £15k (15%), increases at £50k (25%), again at £100k (40%), £200k (50%) and maybe others at £500k and above.
It applies to all funds received (including offshore and trusts), and by including the offshore funds, you'll find a lot more tax coming in.

Then change the corporation tax rules, so they effectively include employer NI. They either need to be based on profit, turnover, number of employees, or a combination of the three. They should also apply to the corporate structure, so if it there are multiple shell companies, the tax is paid rather than having profits syphoned off to a tax have.

[malvolio]

Please don't give Agencies any ideas on how to advertise a higher salary....

They already do this, don't they? Else why Mr Chaplin's Smurf rates....

[malvolio]

I wonder - what impact would it have on the employee's mindset about employer's NI if their salary was presented to them as fully gross, inclusive of employer's NI?

Is there a reason why salaries have not been presented in that way?

Because it's not their business to know? ISTR that the contents of a payslip are defined in legislation, and must show all the deductions from the employee's gross pay (which is also shown). However that gross pay is exclusive of ERNICs of course.

[Chris Bryce]

As another poster has already mentioned, Andy Chamberlain at IPSE is a good place to start.

I'd also be happy to contribute if you PM me with your email address.

[eek]

I wonder - what impact would it have on the employee's mindset about employer's NI if their salary was presented to them as fully gross, inclusive of employer's NI?

Is there a reason why salaries have not been presented in that way?

Please don't give Agencies any ideas on how to advertise a higher salary....

[ladymuck]

I wonder - what impact would it have on the employee's mindset about employer's NI if their salary was presented to them as fully gross, inclusive of employer's NI?

Is there a reason why salaries have not been presented in that way?

[eek]

Oh I have a think skin, but I need a decent signal to noise ratio here.
No, it's not going to be easy, it's a lot of dosh, though getting the real number is surprisingly hard.

you raise the point about a "traditional" Tory chancellor and that's part of the political picture. At the risk of offending everyone here, contractors are more likely to vote conservative than the the average, unless of course we piss them off,. This point has been made, just not hard enough. Also I believe that not only is the gig economy here to stay, but that engagement will grow in size relative to employment so the numbers of voters mean it has to be done right
Which it isn't.

NI is of itself a scammy dishonest tax.
First up it is not an "insurance" nor is the money hypothecated to the things it is allegedly raised for.
Also of course it is a regressive tax, in that the more money you make, the lower the % NI you pay.
One thing the media never covered was that EU citizens working in the UK were royally ripped off by NI, but that ain't so much of a thing now of course.

It's attractive to politicians because so many people simply don't know that the employer pays a whack and stupidly think taxing employment doesn't affect wages. FFS.

So economically the best thing is for income and corporation taxes raised to the level which compensates for the loss of NI, but that would be unpopulaor despite leaving most people completely unaffected, except of course the HMRC staff employed to deal with it.

Again Employer NI is £60bn - how else are you going to get that sort of money as it requires increasing income tax by about 8p a £.

And that's before you try and figure out how to ensure wages are increased in all cases to reflect the savings that come from removing Employer NI.

Were this my discussion I wouldn't be talking about IR35 I would be asking how can I ensure skilled workers in Glasgow / elsewhere would be happy / be able to take a contract in London as they used to be willing to do.

And that doesn't mean fixing IR35 (too late for that now as the changes seriously scared multinationals) it means how could skilled workers expense the costs of working away from home....

[ladymuck]

This is my simple world view, take it as you wish:

1. Companies (employers if you will) want flexible resources to complement their permanent workforce.
2. They don't want to show extra headcount or pay additional taxes or benefits.
3. Their options are to hire a large consultancy and pay through the nose or take on a freelancer or two.
4. The risk of a self-employed person leaving the hiring company with a tax bill is too great so they have a preference for those working via Limited Companies.
5. The hiring companies are not often honest with themselves, or the resources they're hiring, as to their expectations of the working relationship. Some want employee like control but see #2 above.
6. Some hiring companies know that this employee like control does not attract the calibre of resource they want/need and are willing to engage on a true B2B basis but then fall foul of their own HR and/or Procurement processes.
7. The changes to IR35 have made this worse because the risk mentioned in #4 now happens if they put a foot wrong.
8. To mitigate #7, the contractual chain pushes indemnity down to the contractor and it is a brave contractor with a healthy war-chest who will tell the fee payer they won't accept such an indemnity clause.

There's probably more I could waffle on about but there's brighter minds here who can add more value.

[Dominic Connor]

Oh I have a think skin, but I need a decent signal to noise ratio here.
No, it's not going to be easy, it's a lot of dosh, though getting the real number is surprisingly hard.

you raise the point about a "traditional" Tory chancellor and that's part of the political picture. At the risk of offending everyone here, contractors are more likely to vote conservative than the the average, unless of course we piss them off,. This point has been made, just not hard enough. Also I believe that not only is the gig economy here to stay, but that engagement will grow in size relative to employment so the numbers of voters mean it has to be done right
Which it isn't.

NI is of itself a scammy dishonest tax.
First up it is not an "insurance" nor is the money hypothecated to the things it is allegedly raised for.
Also of course it is a regressive tax, in that the more money you make, the lower the % NI you pay.
One thing the media never covered was that EU citizens working in the UK were royally ripped off by NI, but that ain't so much of a thing now of course.

It's attractive to politicians because so many people simply don't know that the employer pays a whack and stupidly think taxing employment doesn't affect wages. FFS.

So economically the best thing is for income and corporation taxes raised to the level which compensates for the loss of NI, but that would be unpopulaor despite leaving most people completely unaffected, except of course the HMRC staff employed to deal with it.

[WTFH]

1. Simplify the rules
2. Stick with them
3. Apply them evenly and fairly

[northernladuk]

Sigh.
And when IR35 evolves into something worse it won't be your fault, no not at all, because you got to make a dig a tory, well done dear, I hope you enjoyed it.

Was just a tongue in cheek dig at politicians, not just torys.

Politicians being politicians always take that sort of thing seriously, as long as it is presented in a form they can grasp.

That better?

Bearing in mind we are getting shafted by these people left right an centre you can't blame us for having a dig. Maybe wrong time, wrong thread I guess.