November 22nd - The death of contracting as we know it

[eek]

A really stupid question : what about income shifting?

Not stupid but not as obvious as employers NI.

To be honest I suspect it’s irrelevant as income shifting means some tax is paid - and if I couldn’t income shift I would be maxing out my pension far more rapidly. And I suspect a lot of people are in the exact same boat.

[Jolie]

I don't the buy the argument that if you don't pay NI that's morally wrong.

It does not matter what the tax is called, we all pay it. Whether it's dividend tax, corporation tax or income tax, we pay it all.

Most contractors pay substantially more tax than permanently employed people, end of. The issue is about fairness.

As to the question of why we started contracting in the first place, that for me was a number of reasons:

In a permanent role, the salaries are usually very restricted.

You are in control of your own destiny, rather than being under the control of a boss or finance director, who can just dump you if they don't like the look of you. After being made redundant for the 4th time I have never had a break in contracting in over 10 years.

You need to run your life like a business, and contracting enables you to accomplish this.

You can negotiate your contract easier, push the limits of your requirements for day rate, flexibility and holidays, insist that you work from your own limited company premises or indeed abroad as some of us do.

If this is rolled through to the private sector, there will be a mass exodus of people to offshore tax havens and many of the rest will just retire.

The contractors this will hit the most are those with young families, those who are on low rates and those who have not invested in their future.

[Swamp Thing]

I don't the buy the argument that if you don't pay NI that's morally wrong.

It does not matter what the tax is called, we all pay it. Whether it's dividend tax, corporation tax or income tax, we pay it all.

Most contractors pay substantially more tax than permanently employed people, end of. The issue is about fairness.

+1, but as others have said, HMRC is playing a cute publicity game with the wider earning population.

I ran some numbers last night. Last year I was a PAYE perm, just under £100K p.a. The P60 tax and NI on this was £32.1K.
On my current contracting model, when I tot up the CT, VAT and dividend tax due for the end of my current financial year, the total will be £37K. All the usual expenses and reliefs taken account of.
So in my case, Treasury tax receipt goes down by £5K.

Is HMRC/Treasury doing any modelling of the effects of private sector rollout? If I am anything to go by, they will also be losers..

[eek]

+1, but as others have said, HMRC is playing a cute publicity game with the wider earning population.

I ran some numbers last night. Last year I was a PAYE perm, just under £100K p.a. The P60 tax and NI on this was £32.1K.
On my current contracting model, when I tot up the CT, VAT and dividend tax due for the end of my current financial year, the total will be £37K. All the usual expenses and reliefs taken account of.
So in my case, Treasury tax receipt goes down by £5K.

Is HMRC/Treasury doing any modelling of the effects of private sector rollout? If I am anything to go by, they will also be losers..

Remove VAT from your calculations as VAT is considered by HMRC to be revenue neutral for most B2B contracts - as if it wasn't paid out to you, your end client would be paying it to HMRC instead..

[eek]

Interestingly a couple of umbrella companies think announcement November 22nd for April 2018...

[BrilloPad]

Not stupid but not as obvious as employers NI.

To be honest I suspect it’s irrelevant as income shifting means some tax is paid - and if I couldn’t income shift I would be maxing out my pension far more rapidly. And I suspect a lot of people are in the exact same boat.

Just so I am clear, if I was IR35 caught could I pay myself and my wife an income? Or do I have to pay it all as income to me?

[BrilloPad]

The issue is about fairness.

I largely supported your post.

However that sentence ruined it.

It is up to every individual to try to arrange their tax affairs to pay the least tax.

HMRC are worried that computer contractors will upset the "Status Quo". We are "Glorified Typists".

We can argue a lot about what is fair.

Sadly to HMRC fair means we pay whatever they think we ought to pay and get back in or place.

[eek]

Just so I am clear, if I was IR35 caught could I pay myself and my wife an income? Or do I have to pay it all as income to me?

If inside it's your salary so it has to be paid to you - no income splitting with the wife.....

It's why if inside you maximise your pension contributions....

[HugeWhale]

This won't pass or fail depending on the effect it has on many of the people on this forum. It will all be about the impact on White Van Man. We saw this with the proposed, and subsequently withdrawn, NI increases.

If the WVM who regularly support large companies (maybe delivery drivers, security guards, maintenance, window cleaners etc) are impacted, the proposals won't fly; the Sun will kill them off.

[starstruck]

If inside it's your salary so it has to be paid to you - no income splitting with the wife.....

It's why if inside you maximise your pension contributions....

I thought public sector changes were tax deducted at source so you can't pay a company pension anymore.