What is everyone going to do assuming HMR&C and Osborne get their way?

[DaveB]

Purchase Order 60 units - expert engineering consultancy

unit = 1 day

cost £500 / unit

Simples

Which is eactly how it should work. Substitute <area of expertise> for "Expert Engineering" and it can be aplied to almost anything. It's how I deal with my direct clients as well.

[PurpleGorilla]

Personally I think the freelancing/contracting market is too big for Osborne to try to wipe it out in one fell swoop, can you imagine if loads of finance Contractors in London went off to sunnier shores or just changed careers? The city would grind to a standstill.

One thought did cross my mind though, could it not drive ClientCo's/Agencies toward a more flexible model for their contractors, so instead of offering "6 months at £xxx per day". They'd offer "120 days over x months for £yyyyy" ?

At a stroke this would mean contractors are free to have more than one client (So Osborne can F*** right off with his PAYE bollocks..), and this could be agreed at interview "I can work four out of five days for you, I'm currently working 1 day per week at ClientB nominally Fridays but they're fairly flexible".

As Contractors we are flexible (get rid of when they want) this just means they might have to be a bit more flexible too, if not they don't get the workers. Obviously it won't work for all contracts but a lot just need a block of work doing in a certain time frame.

Purchase Order 60 units - expert engineering consultancy

unit = 1 day

cost £500 / unit

Simples

[rl4engc]

Personally I think the freelancing/contracting market is too big for Osborne to try to wipe it out in one fell swoop, can you imagine if loads of finance Contractors in London went off to sunnier shores or just changed careers? The city would grind to a standstill.

One thought did cross my mind though, could it not drive ClientCo's/Agencies toward a more flexible model for their contractors, so instead of offering "6 months at £xxx per day". They'd offer "120 days over x months for £yyyyy" ?

At a stroke this would mean contractors are free to have more than one client (So Osborne can F*** right off with his PAYE bollocks..), and this could be agreed at interview "I can work four out of five days for you, I'm currently working 1 day per week at ClientB nominally Fridays but they're fairly flexible".

As Contractors we are flexible (get rid of when they want) this just means they might have to be a bit more flexible too, if not they don't get the workers. Obviously it won't work for all contracts but a lot just need a block of work doing in a certain time frame.

[Danglekt]

For me I chose contracting so I could keep doing the level of work I enjoy without becoming a VSM in a corporate monster and leaving any job satisfaction at the perpetual meeting room door.

Income wise I earn as a contractor a similar amount gross to what I would if I'd have stayed and climbed the corporate tree. The difference is that due to the fact I've managed to have back to back contracts for a few years and cos of the tax arrangements of being Limited I have more take home - and I get to do work I enjoy without becoming too full of hot air.

If I was forced into the same tax position as a perm then I'd seriously consider trying to jump back into climbing the ladder again as a perm, at least that way I get a fancy company car, "security" and all the other exec perks for the same income, only downside is the depression that will swallow my soul every time I get up for work.

But my current view is that this will not be as extreme as people are worried it will be, and some middle ground will emerge which I aim to tread - doing what I enjoy as a contractor on a slightly better income position than perm is what I'm aiming for. A big part of my decision will be if we can tax plan across the years to allow for bench time - PAYE seems a very unsuitable vehicle for us IMO.

[AtW]

Same argument applies to the US. The "top rate of tax" may be 39.6%, but once you add on state and local taxes, it's a lot more than the 47% marginal Tax+NI rate here, especially in the more affluent states/cities. And they have a lot more bands. In some places, the top rate kicks in when earning millions.

Canada has got good health system for all taxpayers. For USA one needs to be young in which case medical insurance won't be expensive.

Let's take Germany, here is what they've got: 45% income tax, but - "The last change of rates occurs at a taxable income of €250,730 (€501,460 for married couples) when the marginal tax rate jumps from 42% to 45%. The course of the marginal tax rate and the resulting average tax rate are depicted in the graph to the right."

So they correctly add up nicely income for whole family, where as in this country the pro-business Govt is shafting honest hard working taxpayers whose wife stays at home to look after kids.

Capital Gains Tax in Germany is 25% (28% here).

Tax on Dividends - 25%

VAT - 19%

So what we've got is pretty fooked up situation where this country taxes far heavier than Germany

[AtW]

The fact all we now have is an entrepreneurial economy would suggest keeping it is a good idea, but it seems Osborne's only wish is to bankrupt the UK as fast as possible so my statement is invalid.

Yeah, they will keep it ... in such a way that most people won't be able to claim it. Or they might just choose to reform this "archaic" entrepreneurial economy malarkey and move to fully flexible work force that will bend over on request of offshore based friends of the Tory Party.

[BolshieBastard]

Well, I only returned due to having to top up the bank of mum & dad and pension pot so, hopefully I can go back to retirement in 3 more years.

In the meantime, if the tulip hits the fan I'll concentrate on finding contracts closer to home, work via whatever mechanism osbourne brings in (gulp) and as a last resort, go permie.

However, I think the chances of permiedom will be remote since employers will not want to take me on due to ageism.

[TheLordDave]

Lose my house, then emigrate.

[MPwannadecentincome]

I think this is partly about HMG trying to massively reduce the public sector spend on interims, con-sultants and so forth.
Chucking a grenade into that market makes a lot of sense in terms of the deficit.

If contractors go out of the market into permie land that reduces supply which puts up the rates. Also, reduced supply means they have to utilise the consultancies whose rates are already higher. So where is the saving?

[MPwannadecentincome]

For many of my clients, going on the payroll means having to have a grade. The existing grades have specified upper and lower pay limits, so to convert from contractor rates to payroll would mean the clients would need to either set up a specific "contractor" grade, or would lower all contractor rates to fit inside the grades.

Don't banks get around this by giving techies Director and Vice President titles to give them a good pay grade?
But for employers it is more than just the grades, having permies on the books is a liability, no companies want to increase head count for anything other than core roles within the organisation, that is why they used contractors in the first place. Yes FTC is an option and a nice headache for HR in maintaining head counts and grades and pension liabilities.