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Hammond plans tax crackdown on 'synthetic self-employed'

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The Treasury believes a third of people claiming self-employed status as a "personal service company" are actually full employees and should pay more tax.

It says without reform, high levels of non-compliance with tax rules could cost HM Revenue and Customs, which collects taxes, £1.2bn a year by 2023.

It is now looking at demanding that firms which use personal service company contractors take legal responsibility for ensuring "off-payroll" contractors stick to the tax rules known as IR35.

A similar move in the public sector on "synthetic" self-employed has raised £410m extra in taxes since 2016, HMRC estimates suggest.

 

Hammond set to have another push for raising more tax from the 'self-employed'

https://www.bbc.co.uk/news/business-45822650

I wonder if it will stick this time. Not holding my breath.

Q

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Self-employment is a fascinating, multi-headed monster these days. On the one hand you have high-earning, tax-avoiding 'personal service company' folk who are actually employees. Then there are the low-earning deliveroo riders, uber drivers et al. Employed? There are also the self-unemployed with hobby businesses that never make money and rely entirely on benefits. Interesting times.

Q

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'Synthetic self employed'?

Are we in Blade Runner now? I didn't realise we had synthetics living among us.

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People working full time for the same company for years or decades and calling themselves contractors or self employed then bragging about how they are paying less tax is just taking the p*ss. I know people who this applies to. He should be making sure they pay the proper levels of tax like the rest of us.

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32 minutes ago, Quicken said:

Hammond set to have another push for raising more tax from the 'self-employed'

https://www.bbc.co.uk/news/business-45822650

I wonder if it will stick this time. Not holding my breath.

Q

Not this shit again. 

 

If they want more tax they can grab google, apple and amazon by the balls. They pay under 1% of profits generated by selling/advertising in the UK by means of offshore trusts. This being done by design.

 

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4 minutes ago, Tiger131 said:

People working full time for the same company for years or decades and calling themselves contractors or self employed then bragging about how they are paying less tax is just taking the p*ss. I know people who this applies to. He should be making sure they pay the proper levels of tax like the rest of us.

No

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4 minutes ago, Errol said:

'Synthetic self employed'?

Are we in Blade Runner now? I didn't realise we had synthetics living among us.

Mark Carney doesnt seem very human imho

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Alot of employers like the fact they have no responsibility to contractors, and are able to get rid at short notice after 2 years and not have to go through the redundancy process. This can work for ebb and flow of incomming work and taking on specalists on long term projects. 

Employers won't suddenly employe contractors as PAYE staff, they will just push their current employees harder. 

A better way is make everyone contractors. 

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The Treasury is trying to address a problem it has created itself. Merge NI into income tax and tax all income - wage or otherwise - at the same rate. Overnight all these loopholes and the whole industry built up around exploiting them will vanish.

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20 minutes ago, Monkey said:

Alot of employers like the fact they have no responsibility to contractors, and are able to get rid at short notice after 2 years and not have to go through the redundancy process. This can work for ebb and flow of incomming work and taking on specalists on long term projects. 

Very true.  I am working with a guy who has specific IT skills on a project that will last around 3 years he works 3/4 days a week on this project.  He is well paid as the company has no responsibility for NI, sick pay, paternity.  The guy himself does not want to work for a company on an employed basis as he has flexibility to work when he wants. 

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2 minutes ago, Dorkins said:

The Treasury is trying to address a problem it has created itself. Merge NI into income tax and tax all income - wage or otherwise - at the same rate. Overnight all these loopholes and the whole industry built up around exploiting them will vanish.

Not quite - the issue isn't income tax and NI the issue is the proportion of NI that is paid by employers that most employees know nothing about.  It's that invisible 14% tax that is the issue here...

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32 minutes ago, Houdini said:

Not quite - the issue isn't income tax and NI the issue is the proportion of NI that is paid by employers that most employees know nothing about.  It's that invisible 14% tax that is the issue here...

Employers NI isn't invisible, it's printed on my wage slip every month. If it was abolished wages would rise. Both employers and employee NI should be merged into income tax.

Edited by Dorkins

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36 minutes ago, Dorkins said:

The Treasury is trying to address a problem it has created itself. Merge NI into income tax and tax all income - wage or otherwise - at the same rate. Overnight all these loopholes and the whole industry built up around exploiting them will vanish.

Or, or, how about we stop dishing out benefits to people who have never worked in their lives and have no wish to. There is no reason why non productive people should live life off of the backs of those who do.

Another proposal would be to link pensions to what people to put into it, i.e no more triple lock.

I know is radical in todays world, but it's time to think out of the box. 

I have to rent out with no chance of buying, but some tart can get nocked up and get a free 3 bed council home.

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10 minutes ago, No One said:

I have to rent out with no chance of buying, but some tart can get nocked up and get a free 3 bed council home.

Is that still the case? and I wonder if that is only in particular areas now.

A neighbour sold their BTL recently and there was a single mother and children in there. The "best" the council could offer them was a room in a boarding house. We don't have the council houses to give to families any longer in the South but maybe that is different on other parts of the country?

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8 minutes ago, Flopsy said:

Is that still the case? and I wonder if that is only in particular areas now.

A neighbour sold their BTL recently and there was a single mother and children in there. The "best" the council could offer them was a room in a boarding house. We don't have the council houses to give to families any longer in the South but maybe that is different on other parts of the country?

Maybe that's true in London. Outside of that, you can still get decent properties.

Even if its a grotty property, the LL will still charge a fortune for such a property, paid out of taxpayers pockets.

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28 minutes ago, Dorkins said:

Employers NI isn't invisible, it's printed on my wage slip every month. If it was abolished wages would rise. Both employers and employee NI should be merged into income tax.

I agree that it "should", but it's never going to happen as that would make the shocking true level of income tax apparent to Mr/Mrs Average, who is currently being successfully fooled into thinking it's 20% or whatever rate is currently stated instead of the true number of almost 50%.

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How would the state pension system be run with NI abolished and merged into income tax? Currently it is based on years of NI contributions (or 'credits'). What would happen to NI credits? Not saying it shouldn't happen, but as Tes Tickle says, there are many questions. You'd also get heavy grey lobbying against income tax rising on their gold-plated pension incomes.

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Most of the tax rules are designed for politicians, peers and their cronies to pay less tax.

The solution is to tax everyone the same. This means combining national insurance tax (employee and employer) into general taxation and aligning the rates with dividend and capital gains tax rates. This may mean dividend and capital gains have to go up. There should also be just a single allowance, or maybe it would be better for no allowance so that everyone contributes and they get a summary each month of how their taxes have been spent.

Why should those that do nothing but earn rentier income pay less tax than a full-time worker doing something productive?

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1 hour ago, Errol said:

'Synthetic self employed'?

Are we in Blade Runner now? I didn't realise we had synthetics living among us.

Should have by now, it was set in 2019 IIRC.

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4 minutes ago, Captain Kirk said:

Most of the tax rules are designed for politicians, peers and their cronies to pay less tax.

The solution is to tax everyone the same.

Yes. Also, the Tax Code needs to be refined down into a one page set of laws. Very easy to do.

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2 hours ago, Tiger131 said:

People working full time for the same company for years or decades and calling themselves contractors or self employed then bragging about how they are paying less tax is just taking the p*ss. I know people who this applies to. He should be making sure they pay the proper levels of tax like the rest of us.

Cant disagree and its much wider than just, Tax rates NI rates or dayrates. When i mentioned to my colleague i was looking to buy a new macbook pro he offered to put it through his company as it would have saved me something in the region of £600 in VAT and 40% income tax. I declined as it'd be fraud, but the difference is absolutely insane. Car parking, bus tickets, lunch, coffee during a meeting all cost an PAYE employee more than a contractor who can expense these things.

My colleagues are 75% contractor. I've been speaking to them about the potential changes in rights for 'self employed' people, holidays sick pay etc are all rights that, because of people like DPD, Uber, Sports Direct etc that contractors seem likely to find themselves legislated to have over the next couple of years. This will bring their terms and conditions much closer to those of a 'permanent employee'. The argument in the past has been that contractors are paid more because they don't have these rights, but it seems part of that argument is going to vanish. I would have thought that this will bring permanent and contractor rights closer together and reduce contractor rates (as its hardly likely to increase PAYE rates)

My contracting colleagues tell me that if they are forced to accept these rights day rates will have to increase, they tell me that if they are forced into IR35 then day rates will have to increase but I can only see reasons for those rates to decrease as contractors and permanent staff become more and more similar. Will be interesting to see what happens. 

Edit - another thought - This isn't a change to the IR35 rules, but moving responsibility for asserting those rules to the employer. If you've had a long working relationship with an employer who now decides you are within IR35 then i would assume that puts all historic work you've done with that employer within IR35 as well.

Edited by regprentice

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