RugbyRebels

I’ve worked out you cryptic thread title, Sandy.
Is it:
‘It’s never Corbyn’s fault’?

Stom wrote:

Sandydragon wrote:

Stom wrote: Btw, I’m not someone who wants high personal taxation on salaried income. I think dividends should be taxed the same as income as, well, it’s income. That would fix a gaping hole in finances.

Dividends are taxed at similar rates to income tax - higher in some cases. The company pays corporation tax at 19% before it can pay the dividend and then the shareholder pays at 7.5%, 32.5% or 38.1% on what is received. This means that £100 of pre-tax profit in the company, if paid as dividend, is taxed at an aggregate of 25%, 45% or 50%.The equivalent income tax rates on salary are 20%, 40% and 45%.
NIC is different and carries its own complications.

Regarding the (super)-rich upping sticks, the last time there was a recorded "brain drain" was in the 160s and 1970s when there were multiple progressive tax rates, reaching 83% of earnings and 15% of savings - so someone putting net earnings into savings could pay an effective 98% tax rate on that savings income. It was less straightforward to move then as well.

The response to the current spending will lead to an increase in taxation, but hopefully with an eye on the notions that tax should be equitable, comprehensible and certain. I'm not holding my breath though.

L'Historien wrote:

Stom wrote:

Sandydragon wrote:

Dividends are taxed at similar rates to income tax - higher in some cases. The company pays corporation tax at 19% before it can pay the dividend and then the shareholder pays at 7.5%, 32.5% or 38.1% on what is received. This means that £100 of pre-tax profit in the company, if paid as dividend, is taxed at an aggregate of 25%, 45% or 50%.The equivalent income tax rates on salary are 20%, 40% and 45%.
NIC is different and carries its own complications.

Regarding the (super)-rich upping sticks, the last time there was a recorded "brain drain" was in the 160s and 1970s when there were multiple progressive tax rates, reaching 83% of earnings and 15% of savings - so someone putting net earnings into savings could pay an effective 98% tax rate on that savings income. It was less straightforward to move then as well.

The response to the current spending will lead to an increase in taxation, but hopefully with an eye on the notions that tax should be equitable, comprehensible and certain. I'm not holding my breath though.

Do you have figures/insight into the ‘brain drain’ in France under Hollande?

L'Historien wrote:

Stom wrote:

Sandydragon wrote:

Dividends are taxed at similar rates to income tax - higher in some cases. The company pays corporation tax at 19% before it can pay the dividend and then the shareholder pays at 7.5%, 32.5% or 38.1% on what is received. This means that £100 of pre-tax profit in the company, if paid as dividend, is taxed at an aggregate of 25%, 45% or 50%.The equivalent income tax rates on salary are 20%, 40% and 45%.
NIC is different and carries its own complications.

Regarding the (super)-rich upping sticks, the last time there was a recorded "brain drain" was in the 160s and 1970s when there were multiple progressive tax rates, reaching 83% of earnings and 15% of savings - so someone putting net earnings into savings could pay an effective 98% tax rate on that savings income. It was less straightforward to move then as well.

The response to the current spending will lead to an increase in taxation, but hopefully with an eye on the notions that tax should be equitable, comprehensible and certain. I'm not holding my breath though.

I've always taken it as a given that increasing personal taxation rates lowers the overall tax take, but guess that its not as simple as that, as it will also relate to the state of the economy. Is there any 'controlled' source for my blithe assumption?

Banquo wrote:

L'Historien wrote:

Stom wrote:

Dividends are taxed at similar rates to income tax - higher in some cases. The company pays corporation tax at 19% before it can pay the dividend and then the shareholder pays at 7.5%, 32.5% or 38.1% on what is received. This means that £100 of pre-tax profit in the company, if paid as dividend, is taxed at an aggregate of 25%, 45% or 50%.The equivalent income tax rates on salary are 20%, 40% and 45%.
NIC is different and carries its own complications.

Regarding the (super)-rich upping sticks, the last time there was a recorded "brain drain" was in the 160s and 1970s when there were multiple progressive tax rates, reaching 83% of earnings and 15% of savings - so someone putting net earnings into savings could pay an effective 98% tax rate on that savings income. It was less straightforward to move then as well.

The response to the current spending will lead to an increase in taxation, but hopefully with an eye on the notions that tax should be equitable, comprehensible and certain. I'm not holding my breath though.

I've always taken it as a given that increasing personal taxation rates lowers the overall tax take, but guess that its not as simple as that, as it will also relate to the state of the economy. Is there any 'controlled' source for my blithe assumption?

Bloody hell. Don’t open up the Laffer Curve argument. We’ve enough problems to deal with

Mellsblue wrote:

L'Historien wrote:

Stom wrote:

Regarding the (super)-rich upping sticks, the last time there was a recorded "brain drain" was in the 160s and 1970s when there were multiple progressive tax rates, reaching 83% of earnings and 15% of savings - so someone putting net earnings into savings could pay an effective 98% tax rate on that savings income. It was less straightforward to move then as well.

The response to the current spending will lead to an increase in taxation, but hopefully with an eye on the notions that tax should be equitable, comprehensible and certain. I'm not holding my breath though.

Do you have figures/insight into the ‘brain drain’ in France under Hollande?

The 75% rate was introduced in September 2012. The govt. claimed it would raise 30 billion Euros in 2013. When the figures came in, it raised 14 Billion.
By the time the rate was restored to 45% in February 2015, 2.5 million French citizens were living and working abroad, but that includes for all sorts of reasons, not just tax. The rate of emigration had increased and London had so many French residents entitled to vote at the last Presidential election, politicians campaigned there.
The telling point is how quickly the policy was reversed - it didn't bring in the money it needed to, it discouraged inward investment and it was a political liability.
The most well-known emigre was Gerard Depardieu - but he left in 2012.

Which brings me on to The Laffer Curve...

L'Historien wrote:

Mellsblue wrote:

L'Historien wrote:
Regarding the (super)-rich upping sticks, the last time there was a recorded "brain drain" was in the 160s and 1970s when there were multiple progressive tax rates, reaching 83% of earnings and 15% of savings - so someone putting net earnings into savings could pay an effective 98% tax rate on that savings income. It was less straightforward to move then as well.

The response to the current spending will lead to an increase in taxation, but hopefully with an eye on the notions that tax should be equitable, comprehensible and certain. I'm not holding my breath though.

Do you have figures/insight into the ‘brain drain’ in France under Hollande?

The 75% rate was introduced in September 2012. The govt. claimed it would raise 30 billion Euros in 2013. When the figures came in, it raised 14 Billion.
By the time the rate was restored to 45% in February 2015, 2.5 million French citizens were living and working abroad, but that includes for all sorts of reasons, not just tax. The rate of emigration had increased and London had so many French residents entitled to vote at the last Presidential election, politicians campaigned there.
The telling point is how quickly the policy was reversed - it didn't bring in the money it needed to, it discouraged inward investment and it was a political liability.
The most well-known emigre was Gerard Depardieu - but he left in 2012.

Which brings me on to The Laffer Curve...

I’d heard about the campaigning in London and, if my memory serves, the French speaking/international schools in the city had to expand to cope. I didn’t know the extent of the movement, though, and if there was any increased tax take or at least enough to make it worth it. Cheers.
I believe Mr Depardieu went to Russia. Which says more about him than the tax policy.

L'Historien wrote:

Stom wrote:

Sandydragon wrote:

Dividends are taxed at similar rates to income tax - higher in some cases. The company pays corporation tax at 19% before it can pay the dividend and then the shareholder pays at 7.5%, 32.5% or 38.1% on what is received. This means that £100 of pre-tax profit in the company, if paid as dividend, is taxed at an aggregate of 25%, 45% or 50%.The equivalent income tax rates on salary are 20%, 40% and 45%.
NIC is different and carries its own complications.

Regarding the (super)-rich upping sticks, the last time there was a recorded "brain drain" was in the 160s and 1970s when there were multiple progressive tax rates, reaching 83% of earnings and 15% of savings - so someone putting net earnings into savings could pay an effective 98% tax rate on that savings income. It was less straightforward to move then as well.

The response to the current spending will lead to an increase in taxation, but hopefully with an eye on the notions that tax should be equitable, comprehensible and certain. I'm not holding my breath though.

The issue in this country is not the rate of tax for dividends but more that for many consultants who operate as individual companies, they can reduce their tax burden by bbeingpaid outside IR35, being cleaver with their expenses, paying themselves the absolute minimum in wage (£12500 is popular) then making up the salary in dividends. It can make a significant difference to someone getting a company income of £600 per day.

Sandydragon wrote:

L'Historien wrote:

Stom wrote:

Dividends are taxed at similar rates to income tax - higher in some cases. The company pays corporation tax at 19% before it can pay the dividend and then the shareholder pays at 7.5%, 32.5% or 38.1% on what is received. This means that £100 of pre-tax profit in the company, if paid as dividend, is taxed at an aggregate of 25%, 45% or 50%.The equivalent income tax rates on salary are 20%, 40% and 45%.
NIC is different and carries its own complications.

Regarding the (super)-rich upping sticks, the last time there was a recorded "brain drain" was in the 160s and 1970s when there were multiple progressive tax rates, reaching 83% of earnings and 15% of savings - so someone putting net earnings into savings could pay an effective 98% tax rate on that savings income. It was less straightforward to move then as well.

The response to the current spending will lead to an increase in taxation, but hopefully with an eye on the notions that tax should be equitable, comprehensible and certain. I'm not holding my breath though.

The issue in this country is not the rate of tax for dividends but more that for many consultants who operate as individual companies, they can reduce their tax burden by bbeingpaid outside IR35, being cleaver with their expenses, paying themselves the absolute minimum in wage (£12500 is popular) then making up the salary in dividends. It can make a significant difference to someone getting a company income of £600 per day.

Companies should be prioritising their product over profit. Any profit made should be put back into the business. If the shareholder wants more money...pay themselves a larger wage!

Which is one reason I've definitely come round to the idea the highest rate tax band should be high - £250,000+ or even higher.

We should be promoting the simplest possible means of payment every step of the way. Disincentivize any need to "game the system" by making it easier for small business owners and contractors with limited companies to pay themselves a decent wage.

I'd think about moving the additional rate to £250,000, and having a super rate of 50% on £1,000,000+

And dividends count toward that. Because, well, it's income.

Stom wrote:

Sandydragon wrote:

L'Historien wrote:
Dividends are taxed at similar rates to income tax - higher in some cases. The company pays corporation tax at 19% before it can pay the dividend and then the shareholder pays at 7.5%, 32.5% or 38.1% on what is received. This means that £100 of pre-tax profit in the company, if paid as dividend, is taxed at an aggregate of 25%, 45% or 50%.The equivalent income tax rates on salary are 20%, 40% and 45%.
NIC is different and carries its own complications.

Regarding the (super)-rich upping sticks, the last time there was a recorded "brain drain" was in the 160s and 1970s when there were multiple progressive tax rates, reaching 83% of earnings and 15% of savings - so someone putting net earnings into savings could pay an effective 98% tax rate on that savings income. It was less straightforward to move then as well.

The response to the current spending will lead to an increase in taxation, but hopefully with an eye on the notions that tax should be equitable, comprehensible and certain. I'm not holding my breath though.

The issue in this country is not the rate of tax for dividends but more that for many consultants who operate as individual companies, they can reduce their tax burden by bbeingpaid outside IR35, being cleaver with their expenses, paying themselves the absolute minimum in wage (£12500 is popular) then making up the salary in dividends. It can make a significant difference to someone getting a company income of £600 per day.

Companies should be prioritising their product over profit. Any profit made should be put back into the business. If the shareholder wants more money...pay themselves a larger wage!

Which is one reason I've definitely come round to the idea the highest rate tax band should be high - £250,000+ or even higher.

We should be promoting the simplest possible means of payment every step of the way. Disincentivize any need to "game the system" by making it easier for small business owners and contractors with limited companies to pay themselves a decent wage.

I'd think about moving the additional rate to £250,000, and having a super rate of 50% on £1,000,000+

And dividends count toward that. Because, well, it's income.

This is single consultants working via their own business. The product is their knowledge and there aren't that many overheads (although stuff that we would pay for ourselves is claimed as an expense). By paying themselves less they avoid tax, particularly at the higher levels. Particularly where they are employed in a role which looks and sounds like a normal employed role would be in an organisation but instead of getting say £50K per annum, they are getting £600 per day.

Look up IR35, the current situation is a joke. The IR35 provisions aren't brilliant in my opinion and make it difficult for true consultancies based on one person companies to work without risk of HMRC challenge, but I fully understand why they are doing it.

Sandydragon wrote:

Stom wrote:

Sandydragon wrote:
The issue in this country is not the rate of tax for dividends but more that for many consultants who operate as individual companies, they can reduce their tax burden by bbeingpaid outside IR35, being cleaver with their expenses, paying themselves the absolute minimum in wage (£12500 is popular) then making up the salary in dividends. It can make a significant difference to someone getting a company income of £600 per day.

Companies should be prioritising their product over profit. Any profit made should be put back into the business. If the shareholder wants more money...pay themselves a larger wage!

Which is one reason I've definitely come round to the idea the highest rate tax band should be high - £250,000+ or even higher.

We should be promoting the simplest possible means of payment every step of the way. Disincentivize any need to "game the system" by making it easier for small business owners and contractors with limited companies to pay themselves a decent wage.

I'd think about moving the additional rate to £250,000, and having a super rate of 50% on £1,000,000+

And dividends count toward that. Because, well, it's income.

This is single consultants working via their own business. The product is their knowledge and there aren't that many overheads (although stuff that we would pay for ourselves is claimed as an expense). By paying themselves less they avoid tax, particularly at the higher levels. Particularly where they are employed in a role which looks and sounds like a normal employed role would be in an organisation but instead of getting say £50K per annum, they are getting £600 per day.

Look up IR35, the current situation is a joke. The IR35 provisions aren't brilliant in my opinion and make it difficult for true consultancies based on one person companies to work without risk of HMRC challenge, but I fully understand why they are doing it.

Government should close loopholes like this.

Say, if a contractor is indistinguishable from an employee, the contractor's company should be given a new classification which means 1) payments by the "employer" to the contractor's company are subject to income tax & NI's, 2) amounts paid to the contractor by his/her company are tax-free and 3) the company is not subject to corporation tax.

Alternatively, a simpler solution (perhaps too simple), contractual payments as above are hit with a transaction tax which makes the whole set-up less cost-effective than regular employment.

Son of Mathonwy wrote:

Sandydragon wrote:

Stom wrote:
Companies should be prioritising their product over profit. Any profit made should be put back into the business. If the shareholder wants more money...pay themselves a larger wage!

Which is one reason I've definitely come round to the idea the highest rate tax band should be high - £250,000+ or even higher.

We should be promoting the simplest possible means of payment every step of the way. Disincentivize any need to "game the system" by making it easier for small business owners and contractors with limited companies to pay themselves a decent wage.

I'd think about moving the additional rate to £250,000, and having a super rate of 50% on £1,000,000+

And dividends count toward that. Because, well, it's income.

This is single consultants working via their own business. The product is their knowledge and there aren't that many overheads (although stuff that we would pay for ourselves is claimed as an expense). By paying themselves less they avoid tax, particularly at the higher levels. Particularly where they are employed in a role which looks and sounds like a normal employed role would be in an organisation but instead of getting say £50K per annum, they are getting £600 per day.

Look up IR35, the current situation is a joke. The IR35 provisions aren't brilliant in my opinion and make it difficult for true consultancies based on one person companies to work without risk of HMRC challenge, but I fully understand why they are doing it.

Government should close loopholes like this.

Say, if a contractor is indistinguishable from an employee, the contractor's company should be given a new classification which means 1) payments by the "employer" to the contractor's company are subject to income tax & NI's, 2) amounts paid to the contractor by his/her company are tax-free and 3) the company is not subject to corporation tax.

Alternatively, a simpler solution (perhaps too simple), contractual payments as above are hit with a transaction tax which makes the whole set-up less cost-effective than regular employment.

You do that and you put companies like mine out of business.

Why not just tax dividends as income? That would have exactly the same outcome. And if he's spending the company's money on courses, education, transport, etc...well, that's what it's there for and I have no problem with that.

Son of Mathonwy wrote:

Sandydragon wrote:

Stom wrote:
Companies should be prioritising their product over profit. Any profit made should be put back into the business. If the shareholder wants more money...pay themselves a larger wage!

Which is one reason I've definitely come round to the idea the highest rate tax band should be high - £250,000+ or even higher.

We should be promoting the simplest possible means of payment every step of the way. Disincentivize any need to "game the system" by making it easier for small business owners and contractors with limited companies to pay themselves a decent wage.

I'd think about moving the additional rate to £250,000, and having a super rate of 50% on £1,000,000+

And dividends count toward that. Because, well, it's income.

This is single consultants working via their own business. The product is their knowledge and there aren't that many overheads (although stuff that we would pay for ourselves is claimed as an expense). By paying themselves less they avoid tax, particularly at the higher levels. Particularly where they are employed in a role which looks and sounds like a normal employed role would be in an organisation but instead of getting say £50K per annum, they are getting £600 per day.

Look up IR35, the current situation is a joke. The IR35 provisions aren't brilliant in my opinion and make it difficult for true consultancies based on one person companies to work without risk of HMRC challenge, but I fully understand why they are doing it.

Government should close loopholes like this.

Say, if a contractor is indistinguishable from an employee, the contractor's company should be given a new classification which means 1) payments by the "employer" to the contractor's company are subject to income tax & NI's, 2) amounts paid to the contractor by his/her company are tax-free and 3) the company is not subject to corporation tax.

Alternatively, a simpler solution (perhaps too simple), contractual payments as above are hit with a transaction tax which makes the whole set-up less cost-effective than regular employment.

That’s kind of what they are doing with the IR35 rules which were finally enforced this year (or should have been but were suspended for 12 months). If the role is basically indistinguishable to a permanent employees then the hiring company basically collects PAYE from the contractor and gives them what’s left. If it’s true consultancy then the hiring company gives the contractor the entire day rate.

It’s causing a huge row amongst self employed contractors but they have been taking the piss for years.

Sandydragon wrote:

Son of Mathonwy wrote:

Sandydragon wrote:
This is single consultants working via their own business. The product is their knowledge and there aren't that many overheads (although stuff that we would pay for ourselves is claimed as an expense). By paying themselves less they avoid tax, particularly at the higher levels. Particularly where they are employed in a role which looks and sounds like a normal employed role would be in an organisation but instead of getting say £50K per annum, they are getting £600 per day.

Look up IR35, the current situation is a joke. The IR35 provisions aren't brilliant in my opinion and make it difficult for true consultancies based on one person companies to work without risk of HMRC challenge, but I fully understand why they are doing it.

Government should close loopholes like this.

Say, if a contractor is indistinguishable from an employee, the contractor's company should be given a new classification which means 1) payments by the "employer" to the contractor's company are subject to income tax & NI's, 2) amounts paid to the contractor by his/her company are tax-free and 3) the company is not subject to corporation tax.

Alternatively, a simpler solution (perhaps too simple), contractual payments as above are hit with a transaction tax which makes the whole set-up less cost-effective than regular employment.

That’s kind of what they are doing with the IR35 rules which were finally enforced this year (or should have been but were suspended for 12 months). If the role is basically indistinguishable to a permanent employees then the hiring company basically collects PAYE from the contractor and gives them what’s left. If it’s true consultancy then the hiring company gives the contractor the entire day rate.

It’s causing a huge row amongst self employed contractors but they have been taking the piss for years.

I haven't looked at how it works, but I'm, for instance, working for a startup at the moment on a per-hour contract, around 10 or so hours a week. Would that count as employment? Would screw me over if it did, you see.

And I do a lot of deals like that.

It's important a balance is struck. I work through my own company and dividends over here are expensive. So you pay yourself a decent wage or find another way to work - as a sole trader, for instance.

Being a sole trader is a massive risk here, unless they've changed the liabilities?

Stom wrote:

Sandydragon wrote:

Son of Mathonwy wrote: Government should close loopholes like this.

Say, if a contractor is indistinguishable from an employee, the contractor's company should be given a new classification which means 1) payments by the "employer" to the contractor's company are subject to income tax & NI's, 2) amounts paid to the contractor by his/her company are tax-free and 3) the company is not subject to corporation tax.

Alternatively, a simpler solution (perhaps too simple), contractual payments as above are hit with a transaction tax which makes the whole set-up less cost-effective than regular employment.

That’s kind of what they are doing with the IR35 rules which were finally enforced this year (or should have been but were suspended for 12 months). If the role is basically indistinguishable to a permanent employees then the hiring company basically collects PAYE from the contractor and gives them what’s left. If it’s true consultancy then the hiring company gives the contractor the entire day rate.

It’s causing a huge row amongst self employed contractors but they have been taking the piss for years.

I haven't looked at how it works, but I'm, for instance, working for a startup at the moment on a per-hour contract, around 10 or so hours a week. Would that count as employment? Would screw me over if it did, you see.

And I do a lot of deals like that.

It's important a balance is struck. I work through my own company and dividends over here are expensive. So you pay yourself a decent wage or find another way to work - as a sole trader, for instance.

Under IR35 it depends how you are contracted. There are 3 main principles:

Supervision’ means the extent to which your client oversees your work and how you perform it to a standard they have specified.

‘Direction’ means your client directing how you complete your assignment, by providing instructions, guidance and advice as to how the work is to be done. Someone providing direction will often coordinate how the work is done as it progresses.

‘Control’ is where you have someone dictating the work you do and how you go about it. This also includes the power to move you from task to task as priorities change.

I don't know what field you work in, so I'll use a rent example from my own specialisation. Lets say company A requires Cyber Security support to commission a new system. If they hire a consultant to review documentation, provide advice and guidance etc, and leave the performance of the work to the contractor with perhaps just a set of completion gates for returns, then that person is outside IR35 and will get the day rate directly.

If a consultant is brought into the organisation and is working directly for a permanent member of staff (or another contractor), is given daily updates tasks, feedback etc and they are expected to be working alongside the wider team then arguably the consultant isn't a consultant at all but another pair of hands within the wider team and here they are deemed to be inside IR35 and PAYE will be dedicated b the day rate by the employer with the remainder sent to the consultant. This also hits on expenses since the consultant won't be able to claim back any expenses above what the company provides permanent staff and of course there will be no training or dev opportunities as the company won't give a toss about the consultant.

The biggest issue that I see is that it is still very much open to debate in many areas and challenge can come from HMRC who can then demand backdated tax and NI. I also understand sole trader consultants who want to invest in their own skills and equipment who will find it more difficult to do so (not sure if claiming back tax at the end of the FY for vehicles and equipment is still permissible), probably not for some things.

However, the problem was that many companies (and government departments) were taking on consultants at £600 - £1000 per day for periods of up to 2 years. This was (rightly) seen as taking the piss and the taxman wasn't happy.

Digby wrote:Being a sole trader is a massive risk here, unless they've changed the liabilities?

I know of a lot of consultants who operate via sole trader companies who are just finding regular work and winding things up. It will drive consultancy into the arms of bigger companies who can make a case that any transaction is B2B, provided they were employing their staff.

That said, independent consultants are still earning £600 plus per day and even when PAYE is deducted, will be taking home equivalent of good annual salaries. They can be let go with every minimal notice with no employment rights, so I can see how this is going to cause problems, but compared to zero hours workers on minimum sage, my sympathy is a bit limited.

Sandydragon wrote:

Stom wrote:

Sandydragon wrote: That’s kind of what they are doing with the IR35 rules which were finally enforced this year (or should have been but were suspended for 12 months). If the role is basically indistinguishable to a permanent employees then the hiring company basically collects PAYE from the contractor and gives them what’s left. If it’s true consultancy then the hiring company gives the contractor the entire day rate.

It’s causing a huge row amongst self employed contractors but they have been taking the piss for years.

I haven't looked at how it works, but I'm, for instance, working for a startup at the moment on a per-hour contract, around 10 or so hours a week. Would that count as employment? Would screw me over if it did, you see.

And I do a lot of deals like that.

It's important a balance is struck. I work through my own company and dividends over here are expensive. So you pay yourself a decent wage or find another way to work - as a sole trader, for instance.

Under IR35 it depends how you are contracted. There are 3 main principles:

Supervision’ means the extent to which your client oversees your work and how you perform it to a standard they have specified.

‘Direction’ means your client directing how you complete your assignment, by providing instructions, guidance and advice as to how the work is to be done. Someone providing direction will often coordinate how the work is done as it progresses.

‘Control’ is where you have someone dictating the work you do and how you go about it. This also includes the power to move you from task to task as priorities change.

I don't know what field you work in, so I'll use a rent example from my own specialisation. Lets say company A requires Cyber Security support to commission a new system. If they hire a consultant to review documentation, provide advice and guidance etc, and leave the performance of the work to the contractor with perhaps just a set of completion gates for returns, then that person is outside IR35 and will get the day rate directly.

If a consultant is brought into the organisation and is working directly for a permanent member of staff (or another contractor), is given daily updates tasks, feedback etc and they are expected to be working alongside the wider team then arguably the consultant isn't a consultant at all but another pair of hands within the wider team and here they are deemed to be inside IR35 and PAYE will be dedicated b the day rate by the employer with the remainder sent to the consultant. This also hits on expenses since the consultant won't be able to claim back any expenses above what the company provides permanent staff and of course there will be no training or dev opportunities as the company won't give a toss about the consultant.

The biggest issue that I see is that it is still very much open to debate in many areas and challenge can come from HMRC who can then demand backdated tax and NI. I also understand sole trader consultants who want to invest in their own skills and equipment who will find it more difficult to do so (not sure if claiming back tax at the end of the FY for vehicles and equipment is still permissible), probably not for some things.

However, the problem was that many companies (and government departments) were taking on consultants at £600 - £1000 per day for periods of up to 2 years. This was (rightly) seen as taking the piss and the taxman wasn't happy.

Lol. So it’s a tech startup, how do you think it works...

Meant to be that I’m an expert they use to complete certain tasks as I see fit, but they’re going to want to use me in any way they can, which means working in a way like your second example.

Startups really do have some truly terrible practices.

based on what you have written, you could fall into either category. If you are able to keep control of how and when you completed your tasks then it would be outside, but for many consultants HMRC are not being clear and the threat of retrospective action poses a risks to people who are trying to follow the rules but may face interpretation issues.

Sandydragon wrote:based on what you have written, you could fall into either category. If you are able to keep control of how and when you completed your tasks then it would be outside, but for many consultants HMRC are not being clear and the threat of retrospective action poses a risks to people who are trying to follow the rules but may face interpretation issues.

Given the way startups work, it'll be a big problem for many of them.

I'm a copywriter, btw, which puts me in sales & marketing in most firms, but in "growth" at startups. lol.

In the example given, I write their website, emails, ads, marketing materials, and also help out on UX (user experience, so interface) copy in the product.

For a standard, non-startup, I'd usually be hired to do their emails, or their sales pages, or their ads, or sometimes all 3 but only for a specific launch or product. Which is obviously example 1.

Stom wrote:

Sandydragon wrote:based on what you have written, you could fall into either category. If you are able to keep control of how and when you completed your tasks then it would be outside, but for many consultants HMRC are not being clear and the threat of retrospective action poses a risks to people who are trying to follow the rules but may face interpretation issues.

Given the way startups work, it'll be a big problem for many of them.

I'm a copywriter, btw, which puts me in sales & marketing in most firms, but in "growth" at startups. lol.

In the example given, I write their website, emails, ads, marketing materials, and also help out on UX (user experience, so interface) copy in the product.

For a standard, non-startup, I'd usually be hired to do their emails, or their sales pages, or their ads, or sometimes all 3 but only for a specific launch or product. Which is obviously example 1.

Agreed, although I think there are dispensations for smaller businesses which would generally include startups. Thie big issue that made lots f people mad/ or rich depending on your perspective, wa government departments hiring in specialist talent as contractors and leaving them in post for years (with a short break every 2 years to avoid giving them full employment rights) which was really expensive but avoided questions about overall head count.

Stom wrote:I haven't looked at how it works, but I'm, for instance, working for a startup at the moment on a per-hour contract, around 10 or so hours a week. Would that count as employment? Would screw me over if it did, you see.

Why would that screw you over? (Not disagreeing with you, just trying to understand)

Sandydragon wrote:

Digby wrote:Being a sole trader is a massive risk here, unless they've changed the liabilities?

I know of a lot of consultants who operate via sole trader companies who are just finding regular work and winding things up. It will drive consultancy into the arms of bigger companies who can make a case that any transaction is B2B, provided they were employing their staff.

That said, independent consultants are still earning £600 plus per day and even when PAYE is deducted, will be taking home equivalent of good annual salaries. They can be let go with every minimal notice with no employment rights, so I can see how this is going to cause problems, but compared to zero hours workers on minimum sage, my sympathy is a bit limited.

I was thinking more you don't limit the liability, though for a large number it should be straightforward not to cock the finances up

Sandydragon wrote: Thie big issue that made lots f people mad/ or rich depending on your perspective, wa government departments hiring in specialist talent as contractors and leaving them in post for years (with a short break every 2 years to avoid giving them full employment rights) which was really expensive but avoided questions about overall head count.

I don't know about likely duration, but in the last couple of weeks I've encountered 3 staffing appointments where perm staff were moved on.out whilst on salaries of say £70-90k and they've been replaced by contractors on salaries around £700-1100 per day, and the one earning over the £1k is a moron into the bargain

Digby wrote:

Sandydragon wrote: Thie big issue that made lots f people mad/ or rich depending on your perspective, wa government departments hiring in specialist talent as contractors and leaving them in post for years (with a short break every 2 years to avoid giving them full employment rights) which was really expensive but avoided questions about overall head count.

I don't know about likely duration, but in the last couple of weeks I've encountered 3 staffing appointments where perm staff were moved on.out whilst on salaries of say £70-90k and they've been replaced by contractors on salaries around £700-1100 per day, and the one earning over the £1k is a moron into the bargain

Not that much of a moron to be getting paid that much, caveat emptor and all that. I think its clear who the real morons are.