Are we really thinking of off payroll rules for Private Sector?

[jamesbrown]

A contractor can of course hold funds over in the Ltd, but is then paying CT this year, and being taxed on divis as income down the road. There is also an Entrpreneurs Tax Relief Scheme which reduces CGT from 33% to 20% with T's and C's.

Right, but that's the point, especially with the high marginal rates you allude to. Obviously, Ireland isn't a great place to do business as a PSC, but everything is relative. I would think that most highly-paid contractors defer income(?). I also vaguely recall a consultation on the use of PSCs last year so, unless I'm recalling incorrectly, or there has been a recent overhaul, there's still a perception that a tax gap arises.

[northernladyuk]

Right, but that's the point, especially with the high marginal rates you allude to. Obviously, Ireland isn't a great place to do business as a PSC, but everything is relative. I would think that most highly-paid contractors defer income(?). I also vaguely recall a consultation on the use of PSCs last year so, unless I'm recalling incorrectly, or there has been a recent overhaul, there's still a perception that a tax gap arises.

So you apply UK marginal rates to the model. Ireland is not a great place for PSCs and a lot of people use a Director's Umbrella (MSC kind of) and pay full whack tax.

But we are discussing this from the echo chamber. Look at it from HMRC's perspective and it's an opportunity to deal with the IR35 mess once and for all.

[PurpleGorilla]

You won't get employment rights. You might get worker rights, though. There is a big difference.

I'll offer my prediction of how this will pan out.

1) Review of workers rights is announced.
2) Review determines that the rights that workers get are fair, but there is no longer a requirement in this day and age to pay for holiday pay as a worker
3) Unions argue this is unfair; businesses argue this is what we need in a post Brexit global economy (insert buzzwords a-plenty) to be competitive
4) Businesses win the argument - business good, union bad
5) A large percentage of contractors are now seen as workers - you get a few rights that businesses don't care much about now because they've got rid of the expensive one.
6) HMRC declare this a "win" because PAYE receipts go up (HMRC do not look at additional costs elsewhere in the system, merely money received via PAYE)

Timescale: Before 2025

As a 'worker' you can pay your pension out of you or GROSS, if you are in ir35 do you pay it out of your NET?

[LondonManc]

As a 'worker' you can pay your pension out of you or GROSS, if you are in ir35 do you pay it out of your NET?

It's a path to the Dark Side....

https://www.gov.uk/employment-status/worker

[jamesbrown]

So you apply UK marginal rates to the model. Ireland is not a great place for PSCs and a lot of people use a Director's Umbrella (MSC kind of) and pay full whack tax.

But we are discussing this from the echo chamber. Look at it from HMRC's perspective and it's an opportunity to deal with the IR35 mess once and for all.

It doesn't matter what marginal rates you apply if the majority of the tax gap arises through income deferral. I am looking at this from HMRC's perspective, which is why I believe they'd ultimately want to prevent income deferral too (e.g. using an adapted version of the pre-1989 close company apportionment rules or, indeed, the IR35 rules if they can increase "compliance"). They've alluded to income deferral as being a major problem in recent consultations. However, if HMG has any sense, they won't do something as drastic as look through. I think they'd favour rolling out the PS rules before that.

[WordIsBond]

You won't get employment rights. You might get worker rights, though. There is a big difference.

I'll offer my prediction of how this will pan out.

1) Review of workers rights is announced.
2) Review determines that the rights that workers get are fair, but there is no longer a requirement in this day and age to pay for holiday pay as a worker
3) Unions argue this is unfair; businesses argue this is what we need in a post Brexit global economy (insert buzzwords a-plenty) to be competitive
4) Businesses win the argument - business good, union bad
5) A large percentage of contractors are now seen as workers - you get a few rights that businesses don't care much about now because they've got rid of the expensive one.
6) HMRC declare this a "win" because PAYE receipts go up (HMRC do not look at additional costs elsewhere in the system, merely money received via PAYE)

Timescale: Before 2025

That might be what business says and they might convince government.

Will the courts agree? Because I think the courts are likely to rule within a year or two that those declared inside IR35 get employment rights. And the hurt that PSBs think they are feeling now is nothing compared to what happens when thousands of inside contractors file claims for holiday pay, etc.

[LondonManc]

That might be what business says and they might convince government.

Will the courts agree? Because I think the courts are likely to rule within a year or two that those declared inside IR35 get employment rights. And the hurt that PSBs think they are feeling now is nothing compared to what happens when thousands of inside contractors file claims for holiday pay, etc.

That'll be insignificant compared to the claims for backdated equality of pay from the perms

[PurpleGorilla]

That might be what business says and they might convince government.

Will the courts agree? Because I think the courts are likely to rule within a year or two that those declared inside IR35 get employment rights. And the hurt that PSBs think they are feeling now is nothing compared to what happens when thousands of inside contractors file claims for holiday pay, etc.

But don't you need to work somewhere over 6months to qualify?

Which is why so many low paid workers get chopped just before the six months, then re-hired under a different contract.

[eek]

That might be what business says and they might convince government.

Will the courts agree? Because I think the courts are likely to rule within a year or two that those declared inside IR35 get employment rights. And the hurt that PSBs think they are feeling now is nothing compared to what happens when thousands of inside contractors file claims for holiday pay, etc.

+1. The idea that you can claim that someone can only have worker rights and not employment rights is going to go down like a lead balloon with the unions. They will be seeking the latter and will be picking only those examples that justify the latter (for they will carefully pick the cases going to tribunals).

Workers rights are what the unions are gunning for if no one has any rights at all. If other people doing similar work have employee rights you can bet workers rights will be neither requested nor acceptable.

[MrMarkyMark]

That'll be insignificant compared to the claims for backdated equality of pay from the perms

Ah, but how would you calculate the differential?

Given the true "cost" of a perm is largely the same as a contractor, in any case?