Hammond plans tax crackdown on 'synthetic self-employed'

[matzie]

I realise there doesn't seem a lot of scope for remaining confident, with what's almost certainly ahead. But, I believe that people who are genuinely in business on their own account will adapt and do whatever we need to do to survive. We may be significantly worse off for a while. But personally, as someone who never works subject to another's supervision/direction/control, and won't do unless there's absolutely no choice - it's not *just* about the money.

[Hobosapien]

Yes there will always be some positives about contracting but largely it depends on the role or nature of the contract. Some roles are better suited to being able to remain isolated from disguised employee status whereas others are almost guaranteed to be caught within IR35.

So where the contract is more delivery of something tangible within a well defined timescale rather than to perform a role that mirrors others within the client's permie structure, you can be more confident that whatever the government comes up with you can remain independent in both nature of work and taxation.

The difficulty is when the role/contract falls in a grey area where working practices are key and the goalposts can be changed retrospectively once in contract.

Personally I'm going to weigh up the pros and cons of three avenues I see in front of me:

1. Contracting via my Ltd that has been unofficially dormant this last year, or close it down. No plan B worthwhile me keeping it going if not using it for contracting. Closed there's less risk of IR35 investigation, no ongoing accountancy fees (that will likely increase with the looming Making Tax Digital changes), and can always open another one if worth going back to this method of operating.

2. Continue contracting as a pseudo-employee of an umbrella company (presuming rules on that don't change soon ), with a rate higher than normally accepted to offset being inside IR35 as much as possible. Using the pension contribution (up to £40k per year) method of offsetting taxes on the way in feels good, but no idea what the taxes will look like on the way out when the time comes.

3. Go full permie somewhere within commuting distance. No more working away during the week and can just go with the flow, taking my foot of the gas like many non-voracious permies do to pay the bills without all the corporate bollox to climb an imaginary career ladder.

Then the decision is what role I want to continue working within that has both opportunity of work and a worthwhile typical rate. Having moved between various techy related roles over the years I at least aren't stuck with one.

For those having similar thoughts, don't worry it'll be fine, the death of contracting has been predicted for decades.

[SussexSeagull]

I think it being in a budget is fairly much a done deal, most probably this time round. I can then see a battle royale between HR and Accounts departments with HR wanting people outside and Accounts people inside to mitigate risk.

[JohnM]

why is everyone so doom and gloom about this - the UK based IT economy cannot survive without a flexible contract based workforce. That is an unquestionable fact

Companies will always need contractors for projects, contracts will be rewritten and working practices changed to keep employee's outside of IR35 on the vast majority of IT contracts apart maybe at the really big companies.

If a company wants a contract resource it will do whatever it has to do in order to get it. By the time this comes into force in April 2020 most private sector contracts and working practices will have been completely rewritten and reworked.

I hope all you doom mongers do go perm as it will leave loads of work for those of us left behind

[BR14]

why is everyone so doom and gloom about this - the UK based IT economy cannot survive without a flexible contract based workforce. That is an unquestionable fact

Companies will always need contractors for projects, contracts will be rewritten and working practices changed to keep employee's outside of IR35 on the vast majority of IT contracts apart maybe at the really big companies.

If a company wants a contract resource it will do whatever it has to do in order to get it. By the time this comes into force in April 2020 most private sector contracts and working practices will have been completely rewritten and reworked.

I hope all you doom mongers do go perm as it will leave loads of work for those of us left behind

Magic! - can i have your dealer's number? does 'e deliver?

[Hobosapien]

Companies will always need contractors for projects, contracts will be rewritten and working practices changed to keep employee's outside of IR35 on the vast majority of IT contracts apart maybe at the really big companies.

If a company wants a contract resource it will do whatever it has to do in order to get it. By the time this comes into force in April 2020 most private sector contracts and working practices will have been completely rewritten and reworked.

Only senior managers at client companies can prove that theory. Any on here able to offer their input on how their client is looking to mitigate private sector IR35 changes if they happen? I expect most clients won't have a scooby do about it until Gammond puts it in the budget.

I hope all you doom mongers do go perm as it will leave loads of work for those of us left behind

Good point. We're all competitors, providing we have similar skills sets and go for similar roles. See you at the interview waiting area. I'll be the one getting the contract. If I haven't gone permie by then.

[sira]

This wont be delayed until 2020. Hammond wont pass up an opportunity to try and claim more tax.

We'll either have to exert more effort into finding ex-ir35 gigs, go perm or take the dreaded FTC's.

HMRC know that a percentage of contractors will turn perm, so win win for them. Its a shame they are too clueless to consider the long-term negative implications on the economy.

[ChimpMaster]

This wont be delayed until 2020. Hammond wont pass up an opportunity to try and claim more tax.

How much "notice" was given by the government when IR35 was forced onto all Public sector contracts?

HMRC know that a percentage of contractors will turn perm, so win win for them. Its a shame they are too clueless to consider the long-term negative implications on the economy.

Except that HMRC are too stupid to realise that tax-take will drop considerably when they force contractors into permanent employment.

[Scruff]

How much "notice" was given by the government when IR35 was forced onto all Public sector contracts?

Except that HMRC are too stupid to realise that tax-take will drop considerably when they force contractors into moving abroad

Fixed that for my intentions

[ChimpMaster]

Fixed that for my intentions

And for anyone who remains in the UK and switches to a permanent job: rather than generating say £100k in revenue as a contractor (£450/day), they will earn probably half that in salary, so let's say £50k, as a permie.

Permanent job: £50k gives HMRC £13k tax/NI + £5.7k Employers NI, so a total of £19,700 tax

Contractor: £100k (with minimal salary and expenses) gives rise to 16.7k Corp Tax + 13k tax on dividends on full profit distribution. So a total of £29,700 tax

And this is where the delinquency of HMRC shines through.