Public sector IR35 consultation launched

[gables]

Including the CBI and REC. Nobody but HMRC have come out in favour of this.

That doesn't mean anyone should stop complaining / lobbying / responding to the consultation though - if everyone gives up before the deadline, then it will become a certainty for public sector and then private sector ("nobody complained last time, so it must be OK")

This, keep banging the drum, keep trying to get HMRC evidence\figures exposed as the lies they are - you owe it to your members!! (not that I am a member)

[DaveB]

Ironically, there is a lot of extra stuff in the details that are positive.

Requiring departments to review their use of contractors, put succession plans in place to hire permanent staff and to limit long term use of contractors rather than permies. All good management policies that should have been happening anyway and would save them a load of cash in the longer term.

[nucastle]

I'm currently in the PS with an October contract expiry, and this news has more or less sealed the deal for me to jump ship.

A number of my colleagues aren't so convinced of the doom and gloom and equate the losses to them, being anywhere between 13% worst case (fully caught by IR35 and pay the tax) and 0% on the basis that rates are suddenly going to rise so that the net effect to the contractor is zero - this assumes that Capita and the agency/agencies in the middle reduce their margin, or rates go up to the government etc etc. We are talking people currently earning between 400-600 a day here.

I've looked at the online IR35 calculators and they quote a loss per month of anywhere between 2500 and 5000 a month based on the above daily rate if caught inside IR35, but the general feeling amongst my colleagues is that the current calculators do not apply to how the rules will actually be applied come next April - is this right?

[missinggreenfields]

This, keep banging the drum, keep trying to get HMRC evidence\figures exposed as the lies they are - you owe it to your members!! (not that I am a member)

You don't have to be a member to reply to the consultation yourself

And there is a good CUK discount for new members I think.

[youngguy]

That's IPSE and every other serious body with even a vague interest, such as ICAEW, the IR35 Forum, and many other trade bodies and consultancies. If the people raising the consultation don't listen to the answers, just what do you expect anyone to do about it? Apart from us whinging form the sidelines of course...

Are you kidding? I've asked IPSE directly on here and had no answers. In my experience if someone is unable /unwilling to tell you what they have been doing....it usually means the answer is very little .

They didn't do anything - didn't rally the troops - and now the decision has already been made. Even if they presented good argument to Gov now, Gov would be less inclined to listen due to having to do a u turn and lose face.

I've been a member for 10 yrs and won't be renewing. I don't blame IPSE for losing the fight but I do blame them for not having the fight.

[missinggreenfields]

I'm currently in the PS with an October contract expiry, and this news has more or less sealed the deal for me to jump ship.

A number of my colleagues aren't so convinced of the doom and gloom and equate the losses to them, being anywhere between 13% worst case (fully caught by IR35 and pay the tax) and 0% on the basis that rates are suddenly going to rise so that the net effect to the contractor is zero - this assumes that Capita and the agency/agencies in the middle reduce their margin, or rates go up to the government etc etc. We are talking people currently earning between 400-600 a day here.

I've looked at the online IR35 calculators and they quote a loss per month of anywhere between 2500 and 5000 a month based on the above daily rate if caught inside IR35, but the general feeling amongst my colleagues is that the current calculators do not apply to how the rules will actually be applied come next April - is this right?

13% seems incredibly low, given the level of employees NI plus NI to pay, and the unknown about who is going to pay the employers NI. The idea that rates will rise seems a tad naive as well on their part - my calculation is that I would look to increase my rate by 40-50% to cover this, which I can't see the client choosing to pay.

The rules aren't going to be changing in terms of tax assessment, so I don't understand why the calculator would be wrong.

[nucastle]

13% seems incredibly low, given the level of employees NI plus NI to pay, and the unknown about who is going to pay the employers NI. The idea that rates will rise seems a tad naive as well on their part - my calculation is that I would look to increase my rate by 40-50% to cover this, which I can't see the client choosing to pay.

The rules aren't going to be changing in terms of tax assessment, so I don't understand why the calculator would be wrong.

I can't see anyone in the chain between the government and the contractor suddenly taking a huge loss on the chin. Presumably the tax and NI is going to be deducted by the agent.

[youngguy]

13% seems incredibly low, given the level of employees NI plus NI to pay, and the unknown about who is going to pay the employers NI. The idea that rates will rise seems a tad naive as well on their part - my calculation is that I would look to increase my rate by 40-50% to cover this, which I can't see the client choosing to pay.

The rules aren't going to be changing in terms of tax assessment, so I don't understand why the calculator would be wrong.

IIRC the 13% was the tax hit. It didn't take into account the T&S hit.

I agree the rate rise is optimistic ,but I'd say it is worth a try, if nothing else to make depts aware of the reason 'my costs go up, my rates go up'. If they say no ppl should walk

I suppose the overall hit would depend on how much t and s a contractor claims. I'm still not clear what this means for t and s (5% allowable as per inside ir35??)

Whoever works out a calculator is a better man than I.

I

[nucastle]

So are any of these IR35 calculators accurate?

Using the one on this site, assuming 10k a year salary gross and the rest taken as dividends with zero expenses (just to keep it simple) gives us the following :

R35 Calculator Results

Inside IR35 net monthly income: £4,288

Outside IR35 net monthly income: £7,285

Calculation based on:

£ ADDITIONAL ANNUAL INCOME

£400 DAILY

£10000 GROSS SALARY

40 HOURS PER WEEK

100% OF DIVIDEND

44 WEEKS PER YEAR

TAX CODE OF 1060L

£ ANNUAL EXPENSES

[northernladuk]

So are any of these IR35 calculators accurate?

Using the one on this site, assuming 10k a year salary gross and the rest taken as dividends with zero expenses (just to keep it simple) gives us the following :

R35 Calculator Results

Inside IR35 net monthly income: £4,288

Outside IR35 net monthly income: £7,285

Calculation based on:

£ ADDITIONAL ANNUAL INCOME

£400 DAILY

£10000 GROSS SALARY

40 HOURS PER WEEK

100% OF DIVIDEND

44 WEEKS PER YEAR

TAX CODE OF 1060L

£ ANNUAL EXPENSES

They can never be accurate due to other factors involved in each situation so they are a guide at very best IMO.