Any point in contracting after April 2016?

[diseasex]

Nail on the head

as for tykemerc's question what to invest instead of withdrawing the cash from ltd as higher dividend -
HL Multi-Manager Income & Growth Trust Income or similar
multiasset means the risk is spread over many assets
dividend is paid (and not interest) that means the CT has been paid on that already (if I understand it right). And indexation will reduce CT significantly too if you sell after few years

just an example

[cojak]

Do not post urls of 'investment schemes' please.

[LondonManc]

A few points:

1. Pre around 1997, expenses to and from place of work were not generally claimable by contractors. The contract market nonetheless increased.
2. When IR35 came in (2000), there were further predictions of doom, and the contract market (after stalling for a bit due to other reasons) nonetheless increased.
3. It took years before the actual working out of IR35 became clear.
4. If you want to increase your take home pay, the focus should be on seeking to earn more, not paying less tax (while still taking advantage of any concessions/loopholes you can find). Taxes can always go up and down, and taxation is never fair(tm) for everyone.

The advantages of contracting (by and large):

1. Take home pay more than doing the same kind of work as a permie.
2. No appraisals, no target setting, no HR interference.
3. Choosing own way of working.
4. Control of your own career path
5. Flexibility over when you work
6. Opportunity to move into other business areas

Obviously the first of these is primary to most. If after all the changes it remains true, then there would be point in continuing. For others the remaining points may still swing the balance.


Pre 97, one exception to expenses for travelling to work was if your place of work was in another country. In 96 I was working for EuroTunnel, so I asked if I could be based in Calais. It was agreed, and I subsequently reduced my tax bill significantly. This exception may still be on the books, for all I know!

I disagree. A lot of contractors do project-based work and being in one company won't give them that as they'll inevitably drift into supporting what they've built and becoming stale. It's probably fairer to say that the improved take home balances against the risk of short term contracts.

[expat]

I disagree. A lot of contractors do project-based work and being in one company won't give them that as they'll inevitably drift into supporting what they've built and becoming stale. It's probably fairer to say that the improved take home balances against the risk of short term contracts.

Build it in 6 months. Support it for 3 years. Gaak!

[expat]

as for tykemerc's question what to invest instead of withdrawing the cash from ltd as higher dividend -
HL Multi-Manager Income & Growth Trust Income or similar
multiasset means the risk is spread over many assets
dividend is paid (and not interest) that means the CT has been paid on that already (if I understand it right). And indexation will reduce CT significantly too if you sell after few years

just an example

Can a company invest in that?

[diseasex]

Can a company invest in that?

Yes,
Hargreaves for example don't show it on their website but when I asked their support they have sent me forms to fill to have the account on company name
now if you profit from shares sale you pay CT minus indexation (over the years CT will be significantly reduced thanks to indexation)
if you profit on dividend , to my understanding you don't pay CT on it as it had it already paid in the company that gave the dividend. Unless you pay it out
That seem like a nice get-rich scheme if you reinvest dividends and let the capital grow =
)
So you don't pay dividend yourself at 7.5% or higher just keep in the company and invest in assets

[MarkT]

Well I see it this way...

Maybe the way around this would be for a new arrangement between contractors, recruiters and clients.

Client wants a contractor and asks Recruiter to find a contractor for him.
Recruiter asks contractor to have interview/take job with Client.
Client then offers contractor a contract directly with them, part of which included a % of their rate to be paid to the recruiter as a finders fee.

Client then has direct contract with contractor and recruiter still gets paid.

Workable?

[TykeMerc]

as for tykemerc's question what to invest instead of withdrawing the cash from ltd as higher dividend -
HL Multi-Manager Income & Growth Trust Income or similar
multiasset means the risk is spread over many assets
dividend is paid (and not interest) that means the CT has been paid on that already (if I understand it right). And indexation will reduce CT significantly too if you sell after few years

just an example

You said invest "in the business", not use the business' money to invest, there's a monumental difference. As a business owner you REALLY need to get your head around this.

If nothing else profits realised on investments done within the YourCo Ltd vehicle will attract CT just like any other revenue generation the company does and getting the money out of the company has exactly the same limitations as money realised by contracting. In fact what you're suggesting as your grand scheme is simply how you use the warchest, it's nothing new and something many of us already do in one form or another, there are cautions to pay attention to over how much of the business can be investments before other regulations kick in.

Investing "in the business" would involve buying plant or machinery to make or do things, possibly buying a suite of PC's and software to run training courses for customers on, putting an employee (not yourself as the owner) through training to earn fees would also be "investing in the business".

Tax burden and T&S expenses are serious considerations that help decide if business is worth doing and for those of us that routinely have significant T&S there's notable potential for it to become impractical or irrational to stay in business.

[cojak]

Or contractor pays recruiter, as in the entertainment business (currently not legal atm).

[diseasex]

Maybe the way around this would be for a new arrangement between contractors, recruiters and clients.

Client wants a contractor and asks Recruiter to find a contractor for him.
Recruiter asks contractor to have interview/take job with Client.
Client then offers contractor a contract directly with them, part of which included a % of their rate to be paid to the recruiter as a finders fee.

Client then has direct contract with contractor and recruiter still gets paid.

Workable?

I think who are you in contract with doesn't matter. What matters is how many employees have you got. If none then you will get hammered