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AvoidDebt

Tax changes could cost UK public sector workers 30% of salary

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1 hour ago, AvoidDebt said:

How long before this hits the private sector too? Highly leveraged IT contractors take note. 

https://www.theguardian.com/society/2017/feb/27/tax-changes-uk-public-sector-workers-salary-exodus-nhs

You are about 15 years too late.

IR35 has already hit contractors.

This change is just to force people contracting for the public sector to pay tax.

Individuals contracting for companies is probably going to be dead.

Any contractor effectively working for a company needs to ensure they have multiple customers/income sources over the tax year.

Its not just IT. My brother does this - building  checks and all that.

His job is only viable as he can pay travel and accommodation out of pre-tax income.

 

 

 

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Bit of a non story. Maybe ros from poverty118later should write them a report?

Edited by Si1

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I like the sub point of HMRC claiming back historically owed back taxes. Wonder if any dodgy contractor types will be hit with both S24, ir35 and then capital gains tax too?

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Loads of repercussions with contract work like this. Not full time, no benefits, out of pocket living expenses - a lot will be away from home, prospect of almost no notice layoff, downtime periods.  Might see a lot leave altogether.

No matter, sure we can get some others cheap with mad skillz to take up the slack.

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19 minutes ago, onlyme2 said:

Loads of repercussions with contract work like this. Not full time, no benefits, out of pocket living expenses - a lot will be away from home, prospect of almost no notice layoff, downtime periods.  Might see a lot leave altogether.

No matter, sure we can get some others cheap with mad skillz to take up the slack.

And go and do what? Apply their locum nursing skills working at superdrug?

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1 minute ago, Si1 said:

And go and do what? Apply their locum nursing skills working at superdrug?

Was thinking more about the register article - tech type jobs across whole of government sector.  Pretty much everywhere has a requirement for nursing/medical staff. Tech - very concentrated in certain areas or office locations, hence living expenses/short term contract. Techies, to private sector / abroad maybe or just wind down on work or stop.

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2 minutes ago, onlyme2 said:

Was thinking more about the register article - tech type jobs across whole of government sector.  Pretty much everywhere has a requirement for nursing/medical staff. Tech - very concentrated in certain areas or office locations, hence living expenses/short term contract. Techies, to private sector / abroad maybe or just wind down on work or stop.

Or NHS will have to pay a higher rate instead of getting a stealth subsidy from the rest of the tax take.

Edited by Si1

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IR35 was never about tax. It was about control.

Once upon a time, plebs worked for the master on his land, they had no choice. Then after the enclosures act, they had no choice but to journey to the factory for work.

Now in the brave new service orientated world, they have to work for the master's big consultancy company. Now hang on. Why can't they work for their own company? I know we'll introduce a tax, that says, you cant do the consultancy work if you (or connected persons) own more than 5% of the shares. So now they have to work for the master's company, because if they work for their own, they will have to pay tax, NI, and employer's NI on their revenue, with no chance to put money aside for the periods where their is no work, likewise no provision for retraining, new equipment, no chance to expand and take on staff etc., while of course taking the other risks such as non-payment of invoices, being sued and so on.

IR35 was a Labour invention, you know those people who said the workers should own the means of production... and when they did they closed them down.

Its immoral that anyone can profit from the provision of knowledge, except that those that actually possess it.

Still actors are exempt, as are the 'real' home-servants of the master, like butlers etc. Because they don't tread on the toes of the big consultancy firms. And of course you have to be nice to luvvies.

 

 

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Do you really count as a public sector worker if you're agency or contract? The contract would be publicly funded but that's the public sector buying a private sector resource.

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My personal opinion is that if you are a "consultant" contracted to work full time at one firm then you should pay an appropriate amount of income tax. 

If you choose to be flexible by giving up sick pay, pensions, redundancy protection etc. Then you should arrange a higher pay with the employer to compensate. That cost should not be borne by other tax payers.

Paying yourself minimum wage and then claiming the test as dividends is pure tax avoidance.

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54 minutes ago, giesahoose said:

Paying yourself minimum wage and then claiming the test as dividends is pure tax avoidance.

Those days are well and truly gone, ask an accountant, by the time you add on all the extra costs it is cash neutral at best and in most cases not worth the administrative ball-ache.

As far as the government goes it doesn't matter as well because any extra cash it will have to pay out to attract (consultants) skills is now simply recycled within the system i.e. it pays the extra money and gets most of it back (recycling) in tax, one way or another.

Very Simply Headline Rate minus Basic Costs (5%) - (Tax Code Wage NI) - Corporation Tax (20%) - Dividend Tax (10%) - Basic Rate Tax (20%) - Higher Rate Tax as applicable (40%) equals not much difference anymore.

 

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9 minutes ago, ChewingGrass said:

.

As far as the government goes it doesn't matter as well because any extra cash it will have to pay out to attract (consultants) skills is now simply recycled within the system i.e. it pays the extra money and gets most of it back (recycling) in tax, one way or another.

.

 

I don't believe it's that simple.

In a public sector run along market lines, then the ability of one department, agency etc to effectively offload costs by employing contract staff who can avoid tax would distort the market and make them seem more efficient than they really are.

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1 hour ago, giesahoose said:

My personal opinion is that if you are a "consultant" contracted to work full time at one firm then you should pay an appropriate amount of income tax. 

If you choose to be flexible by giving up sick pay, pensions, redundancy protection etc. Then you should arrange a higher pay with the employer to compensate. That cost should not be borne by other tax payers.

Paying yourself minimum wage and then claiming the test as dividends is pure tax avoidance.

If consultancy is an acceptable business for the big corporations, then it is equally valid for SMEs. IR35 is designed to protect those big companies from competition.

You don't suggest that they pay two lots of NI on all their revenue, why not?

By crying tax avoidance you are playing their hand for them. Its a slippery slope, before long, tens of thousands more, perhaps even you, will have to except the loss of employment rights, pension rights and so on in the name of flexibility.

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1 minute ago, Si1 said:

I don't believe it's that simple.

In a public sector run along market lines, then the ability of one department, agency etc to effectively offload costs by employing contract staff who can avoid tax would distort the market and make them seem more efficient than they really are.

But they can't avoid tax anymore, one way or another whether PAYE or Limited HMRC gets its screw. Now this should in turn reflect itself in pay/charge out rates, unfortunately areas where skills are in short supply will attract a premium and always will, but for mundane run of the mill staff the difference will be non existent and agency premiums will make contract staff in all probability dearer.

The only other problem with permanent staff is that you can't get rid of the bad ones easily, trust me there are plenty of those everywhere.

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Ive worked with contractors being paid 3 times my salary to do the same job as me. Ive worked with contractors paying themselves via overseas loans and paying less than 10% tax, ive worked with contractors untouched by ir35 despite continuously and exclusively contracting with the same 'employer' for between 5 and 10 years. 

The problem with contracting is that its becoming ubiquitous. My father in laws financial advisor talked him into becoming a contractor, he pays himself out of the isle of man to pay little tax. What does he do? He is a semi retired substitute teacher. How does one substitute teacher differentiate themselves from another to the extent that they can justify self employment?

To my mind employer application of Ir35 is exactly the same as s24. I get the same pleasure reading the whinging of the scum on property118 as i do those on contractoruk whinging about being taxed 5 or 6 figure sums when they get caught out after paying 10% tax.

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2 minutes ago, ChewingGrass said:

But they can't avoid tax anymore, one way or another whether PAYE or Limited HMRC gets its screw. Now this should in turn reflect itself in pay/charge out rates, unfortunately areas where skills are in short supply will attract a premium and always will, but for mundane run of the mill staff the difference will be non existent and agency premiums will make contract staff in all probability dearer.

The only other problem with permanent staff is that you can't get rid of the bad ones easily, trust me there are plenty of those everywhere.

You can if you filter them out in the first 2 years.

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1 minute ago, regprentice said:

Ive worked with contractors being paid 3 times my salary to do the same job as me. Ive worked with contractors paying themselves via overseas loans and paying less than 10% tax, ive worked with contractors untouched by ir35 despite continuously and exclusively contracting with the same 'employer' for between 5 and 10 years. 

The problem with contracting is that its becoming ubiquitous. My father in laws financial advisor talked him into becoming a contractor, he pays himself out of the isle of man to pay little tax. What does he do? He is a semi retired substitute teacher. How does one substitute teacher differentiate themselves from another to the extent that they can justify self employment?

To my mind employer application of Ir35 is exactly the same as s24. I get the same pleasure reading the whinging of the scum on property118 as i do those on contractoruk whinging about being taxed 5 or 6 figure sums when they get caught out after paying 10% tax.

Thats more a reflection on how poor your management  and your negotiating skills are.

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1 minute ago, spyguy said:

You can if you filter them out in the first 2 years.

Having worked around the pretend privatised public sector for over 30 years I have never seen them sack anyone within 2 years as it takes the system too long to grind them out. Have seen alcoholics, peados, office perverts, serial sick abusers, frauds etc all being either paid off (redundancy) or politely asked to retire early.

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