I'm like @bradders. I had a LTD Company for about 8 years as I was an IT Contractor. But the Government has basically killed it. Most of my type of specialised SAP job has now mostly gone offshore. Even though the offshore company then send a load of Indian staff over to the UK (how does that seem right?). But I too just took a perm job and I'll see what happens in the future. Glad you took Account advice, that's what I was going to suggest.
Eammon Holmes has just lost a test case re IR35. Those who genuinely ran their own business have suffered because the likes of Amazon/Uber etc have abused it.
They’re are a lot of organisations that have certainly maximised their tax efficiency but HMRC are still not going after them, because they believe it generates employment.. I’m afraid some contractors have also abused the rules; IR35 has been around for years ,the only real change is a shift from contractor to client who now determines the status. I can understand the argument for making contractors pay the same sort of tax as a regular employee, but the reality is contractors can be more productive, have a wealth of experience to leverage, and can move from client to client so their experience is shared across the industry. Anyone going into an umbrella company is going to get taxed more than an employee and receive none of the benefits or protection - I’d look at using umbrellas very carefully.
HMRC make less money from me as an employee at the top end of the pay scale for my job vs me as a Ltd company contractor. Fact. I get 15k less in cash in my pocket. Fact. Businesses get less money as I have less disposable income. Fact. My employer gets less flexibility and often less productivity. Fact. Everyone’s a winner
you put yourself in the wrong job then although you have to accept its a undervalued 'low income' job.... plus you appear to have squandered all your income rather than putting at least 14% of it away each month for the said 35 years!
There are very few with a guilt edged pension these days. A lot of people get quite shocked when they see how much pension they will get from £100,000 saved. Equally we all have to be realistic. Many want to retire early and then live the same life they do as when they were in work. The system isn't built for that to happen. My parents generation probably had the best of the pensions years - retired early, usually not through choice, but the Company and pension company made sure they lived a fairly decent quality of life. Retirement requires a plan. Most people don't have one other than giving up work and then find that isn't all that great anyway. The latest issue for many people in work at my age is competing against people who have retired and can live reasonably comfortably, but they are bored so are happy to take part time work at a low rate just to relieve the boredom. As to IR35, i doubt the new rules will change once everything is in place. It will soon be moved to small companies as well. Hopefully i'm done with work by then.
I've dropped this thought before, when the government achieve their target of cutting 90% of Ltd company contractors and making them PAYE contractors (no benefits etc) where will they look to to recoup the VAT they no longer receive from those Ltd companies? Do you think companies will be trying to attract full time employees with fancy packages and pension schemes when they can just phone up 'umbrella-u-like' and get a PAYE contractor? Interesting times ahead I think
I think essentially the personal tax and corporation tax paid by contractors are roughly equivalent of a staff position (taking account of the overall cash difference) but the VAT is pretty much on top and they are going to smart from that loss - Boris has promised not to increase VAT, will that prove to be his latest broken promise?
it simply demonstrates what most have know for years: there is no such thing as joined-up-thinking in the civil service. You only have to look at how HRMRC went after NHS and DWP. So they charge them, fine them, where do HMRC thin the money comes from...Its all tax payers money ffs.
My accountant recommended we didn't claim all the vat and keep a bit for personal use, there's no real figure he could put on it but they seem to be happy with 25% personal use in my case. I do a lot of quotes on my bike.
Only one person actually pays the Vat and that is the final end user/customer who cannot claim Vat back on his purchases. Otherwise it just feeds down the line as a charge by the customer and a reclaim by the buyer. What Government loses out on in the subcontractor industry is national insurance contributions both employer and employee and the corporation tax rate is 19% but dividends at 7% whereas the employee would be paying basic rate tax at 20%, employees NI at 12% and the Employer would be paying NI at 13% Plus an employee gets SSP paid for by his employer. However you look at it, financially the Treasury loses out when the subcontractor industry gets out of hand.
They don't. You are missing the fact that a contractor will earn double or triple (in some sectors) the salary of an employee. So you are comparing a 100k salary role when actually it is a 50k one vs a 110k contractor. 19% corp tax, 20k VAT, unless you take less than 40k in dividends you're in the high tax bracket the same as everyone else. Never mid that the extra cash earned (often by living from home, travelling hours per day, not taking sickness or holidays) is spent in shops generating more VAT and supporting wages. Shortsighted and simply a case of envy from this who dont have the balls, or skills, to take the risk.
Yes but a contractor will claim expenses against his income where an employee will not. We have already seen on here how many are claiming tax relief on motorbikes! Believe me, the revenue will have done their sums on this one. They are losing out otherwise they wouldn’t have IR35 in place.
Expenses like what? Mileage is the big one, but you still have to put fuel in. And if you stay away you can claim the hotel cost. Employees get business mileage and companies pay for hotels and claim it. Very few buy things like bikes, and accountant always try to discourage as its a grey area. When disposing, HRMC will ask for a invoice if sold or average of two valuations. If the likes of Exige exploit the tax law by buying a bike like that, on disposal he will either have to sell it cheap or have a complicit couple of dealer friends value low or he'll be paying corp tax on its increase in value too. Its an asset. And it it was written down and depreciated off, big risk of tax fraud, its not like a new bike that loses thousands as soon as its delivered,
