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#IR35 and negative impact on house prices in rural areas


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I've noticed alot of people being hit by #IR35 here in West Wales where lots of city people have moved from England, working remotely as programmers, etc. - salaries slashed - some relocating back to work in London, etc. I wonder what impact this will have on house prices? Possibly our highest paid residents are remote digital and tech workers and they are the guys and gels being dislocated back to the cities by #IR35 - forced back into PAYE in-house roles based in the cities. 

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Been discussed briefly on the Aberdeen thread as well. 

We will see over the next couple of months whether these businesses suddenly come crawling back to contractors and pay through the nose to take them back, Or whether the small army of contractors really can afford to walk off the job and really are genuinely so special that people are falling over themselves to pick them  Up. I've been hearing both for years

The longer term hook is whether HMRC start to go for people who spent 10 years unbroken outside ir35 at a single business and then were suddenly found to be inside ir35 by their employer. HMRC promised not to automatically pursue contractors put inside ir35 in April, but that doesn't stop them pursuing them if they become apparent to them in other ways (say, the blanket investigation into contractors at GSK)

I know more than 10 people looking down the barrel Of a £1/4 mn tax bill if that happens. (10 years outside ir35at a single 'employer' at around £600 a day) 

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12 hours ago, regprentice said:

people who spent 10 years unbroken outside ir35 at a single business

I agree that contractors who spend that long on one contract outside IR35 are probably concealed employees.

All that has changed is the fact that the client now shoulders the IR35 risk rather than the contractor. Since this is new to them, they do not have the required expertise and thus their knee jerk reaction is to declare all contractors inside IR35.

In this conundrum we have had three players:

  • Taxman
  • Client
  • Contractor

Up to now the Client and Contractor have been having a field day with lower tax, lower NI, no employee law, no employee benefits etc etc. So the loser has been HMRC and they have had enough.

IF the IR35 changes go through its between the Client and Contractor as to who loses out.

From the Clients perspective, they will no longer be able to cast their net as wide as before to obtain skill sets that they do not have in house on a temporary timeline. Therefore for a Contractor who can still commute (or move) there is scope for a pay rise (supply and demand).

Personally as a contractor I welcome the changes...it will clear the field of people who should be in full time employment.

However I think there may well be a change of heart by the Govt; this will make the workforce far less flexible at a time (BREXIT) where it will need to be more flexible than at any other time in the last 50 years. Who knows what we may have to start doing for ourselves over the next few years???

As an engineering consultant myself, I am getting ££££ signs in front of my eyes with these changes.

 

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12 minutes ago, Roman Roady said:

As an engineering consultant myself, I am getting ££££ signs in front of my eyes with these changes.

There is certainly going to be opportunity. Loads of people leaving contracts so they aren't in the same contract after the rules change as they were before. But what jobs that leaves and who that leaves to do them Is a mystery. Are 250000 IT contractors all going to move along one job and effectively 'swap roles', has the pool of contracting roles available suddenly dropped from 250k to 150, 100, 50? Don't suppose anyone knows but it feels like half the market has closed itself off to contractors overnight, in the short term at least. 

Not many people would have sympathy with someone complaining because their take home has dropped from 250k to 75k or 125k to 50k. But for those people it's probably a bankruptcy situation. The his'n'hers white Velar and Evoque are getting handed back. 

I'm inside ir35 in Central govt at the moment - two interesting observations...

- Still complex skilled roles being defined as being outside ir35 even if they are in core management roles clearly a part of the engaging businesses structure ('head of data' for example) 

- They seem to be having a 'second pass' of contracts to ensure they treated them correctly. A friend who is a Reporting and MI BA has been put inside ir35 from April despite being found outside ir35 in the original public sector review. Been in the same role for 3 years. 

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1 hour ago, regprentice said:

There is certainly going to be opportunity. Loads of people leaving contracts so they aren't in the same contract after the rules change as they were before. But what jobs that leaves and who that leaves to do them Is a mystery. Are 250000 IT contractors all going to move along one job and effectively 'swap roles', has the pool of contracting roles available suddenly dropped from 250k to 150, 100, 50? Don't suppose anyone knows but it feels like half the market has closed itself off to contractors overnight, in the short term at least. 

Not many people would have sympathy with someone complaining because their take home has dropped from 250k to 75k or 125k to 50k. But for those people it's probably a bankruptcy situation. The his'n'hers white Velar and Evoque are getting handed back. 

I'm inside ir35 in Central govt at the moment - two interesting observations...

- Still complex skilled roles being defined as being outside ir35 even if they are in core management roles clearly a part of the engaging businesses structure ('head of data' for example) 

- They seem to be having a 'second pass' of contracts to ensure they treated them correctly. A friend who is a Reporting and MI BA has been put inside ir35 from April despite being found outside ir35 in the original public sector review. Been in the same role for 3 years. 

If tgeyve been in the same role for 3 years, with no other employment, and this is not some long overrung building project then thryve should have been inside all along.

Its not just IT.

At a guess, id guess broad IT roles only make up a 1/3 of self employed.

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20 hours ago, regprentice said:

Been discussed briefly on the Aberdeen thread as well. 

We will see over the next couple of months whether these businesses suddenly come crawling back to contractors and pay through the nose to take them back, Or whether the small army of contractors really can afford to walk off the job and really are genuinely so special that people are falling over themselves to pick them  Up. I've been hearing both for years

The longer term hook is whether HMRC start to go for people who spent 10 years unbroken outside ir35 at a single business and then were suddenly found to be inside ir35 by their employer. HMRC promised not to automatically pursue contractors put inside ir35 in April, but that doesn't stop them pursuing them if they become apparent to them in other ways (say, the blanket investigation into contractors at GSK)

I know more than 10 people looking down the barrel Of a £1/4 mn tax bill if that happens. (10 years outside ir35at a single 'employer' at around £600 a day) 

It is already a major dislocation... I would imagine instead of going to a single programmer a company could go to a company offering a good selection of IT people under one roof - perhaps in the Baltic - for example. The changes have already taken place from what I can see. Wages down 25-50% for people moving inhouse. 

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1 hour ago, Habeas Domus said:

This may give a welcome boost to permie rates if companies just recruit permanent staff to replace them.

Not something I'm seeing - lots of contractor>permie movement, so could actually depress permie rates. 

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29 minutes ago, gruffydd said:

Not something I'm seeing - lots of contractor>permie movement, so could actually depress permie rates. 

This is like landlords selling their houses.

If theres the same number of jobs and the same number of workers, then nothing much has changed.

But if a sizable number of contractors retire early or move abroad for more lucrative work, then there will be a skills shortage.

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10 minutes ago, Habeas Domus said:

This is like landlords selling their houses.

If theres the same number of jobs and the same number of workers, then nothing much has changed.

But if a sizable number of contractors retire early or move abroad for more lucrative work, then there will be a skills shortage.

The issue with IT services is they can be outsourced abroad - so there is that dimension too. With tech change this is more doable. You can have a real-time integrated office with the staff sitting in different places... that is only just coming through. The skills are international and if it becomes a little more challenging to employ contractors here in the UK, the culture will shift more to outsourcing. 

 

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48 minutes ago, gruffydd said:

The issue with IT services is they can be outsourced abroad - so there is that dimension too. With tech change this is more doable. You can have a real-time integrated office with the staff sitting in different places... that is only just coming through. The skills are international and if it becomes a little more challenging to employ contractors here in the UK, the culture will shift more to outsourcing. 

Been like that for at least a decade. In 2008 I was Co-working with a team in Singapore. 

Works both ways round. Just now I'm working in the same office space as a team of 30 or so Indians who've come over for a midterm contract in the UK all put up in digs, travel in to work together. All working as contractors for an Infosys type business, billed and managed out of India.

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Though I know I'll be sorry I asked this I don't get how HMRC knows you're a contractor and for whom?  Is there such a question on the tax forms?  Or is this done via limited companies which they used to like to call personal service companies?

I was a "contractor" for 10 years for a small firm with their agreement. I wasn't full time and had other work and so I registered as self employed, paid the NI, sent in a tax return and at no time had to mention the name of the firm or any of my "customers".  And I took advice from my accountant, more than once.

Of course had they chosen to conduct an investigation it could all come out. Either that or them sit in a car outside the workplace for days watching  and then go in and ask who everybody was and what they did. Something like this happened to a couple of people I knew.

One day I got a call from a firm representing the Revenue, could they conduct a survey? Told them too busy  as I smelt a rat. I then found that if you call the HMRC helpline (and have three days spare until you get through) they ask are you an employee of a VAT registered business etc etc? As they're still unable after decades of trying to legally define employment and self employment I always said yes but if they'd asked me are you on PAYE I'd have had to say no.

In 2016 the firm got jumpy and said would I go onto PAYE and I agreed. Have to say I was amazed that it cost me more than £2k more a year, even so I'm not expecting to hear from them.

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1 hour ago, gruffydd said:

What happens to subcontrators in construction, for example? Not such digi/tech people: https://www.building.co.uk/focus/ir35-is-this-the-end-of-the-road-for-the-freelance/5103660.article

Not sure. My brother in law is a pipe fitter and was asked to go self employed 15 years ago. Worked for the same construction company ever since as if he were and employee. I think there is a perception in construction that because they work on defined builds for short periods they are. More 'genuinely' self employed. But time will tell. 

Staff in some industries will benefit from the ir35 clampdown. I once had a conversation with a lab technician who told me that the science industries are the opposite to the finance/it industries and contractors are paid half the rate of permie and treated appallingly, but they put up with it in the hope of eventually securing a permanent contract. 

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5 minutes ago, Bluestone59 said:

Though I know I'll be sorry I asked this I don't get how HMRC knows you're a contractor and for whom?  Is there such a question on the tax forms?  Or is this done via limited companies which they used to like to call personal service companies?

I was a "contractor" for 10 years for a small firm with their agreement. I wasn't full time and had other work and so I registered as self employed, paid the NI, sent in a tax return and at no time had to mention the name of the firm or any of my "customers".  And I took advice from my accountant, more than once.

Of course had they chosen to conduct an investigation it could all come out. Either that or them sit in a car outside the workplace for days watching  and then go in and ask who everybody was and what they did. Something like this happened to a couple of people I knew.

One day I got a call from a firm representing the Revenue, could they conduct a survey? Told them too busy  as I smelt a rat. I then found that if you call the HMRC helpline (and have three days spare until you get through) they ask are you an employee of a VAT registered business etc etc? As they're still unable after decades of trying to legally define employment and self employment I always said yes but if they'd asked me are you on PAYE I'd have had to say no.

In 2016 the firm got jumpy and said would I go onto PAYE and I agreed. Have to say I was amazed that it cost me more than £2k more a year, even so I'm not expecting to hear from them.

Ltd Co filing

Single director. Single source of income.

Edited by spyguy
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1 minute ago, regprentice said:

Not sure. My brother in law is a pipe fitter and was asked to go self employed 15 years ago. Worked for the same construction company ever since as if he were and employee. I think there is a perception in construction that because they work on defined builds for short periods they are. More 'genuinely' self employed. But time will tell. 

Staff in some industries will benefit from the ir35 clampdown. I once had a conversation with a lab technician who told me that the science industries are the opposite to the finance/it industries and contractors are paid half the rate of permie and treated appallingly, but they put up with it in the hope of eventually securing a permanent contract. 

Its   murky.

Building contracyors are bailed out as their work location changes with each contract.

However...

A lot of hairdressers are self employed, renting a chair.

You can hiw wide spread the problem is.

 

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5 minutes ago, regprentice said:

Not sure. My brother in law is a pipe fitter and was asked to go self employed 15 years ago. Worked for the same construction company ever since as if he were and employee. I think there is a perception in construction that because they work on defined builds for short periods they are. More 'genuinely' self employed. But time will tell. 

Staff in some industries will benefit from the ir35 clampdown. I once had a conversation with a lab technician who told me that the science industries are the opposite to the finance/it industries and contractors are paid half the rate of permie and treated appallingly, but they put up with it in the hope of eventually securing a permanent contract. 

Self employed is completely different to being a contractor. 

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10 hours ago, Roman Roady said:

I agree that contractors who spend that long on one contract outside IR35 are probably concealed employees.

All that has changed is the fact that the client now shoulders the IR35 risk rather than the contractor. Since this is new to them, they do not have the required expertise and thus their knee jerk reaction is to declare all contractors inside IR35.

In this conundrum we have had three players:

  • Taxman
  • Client
  • Contractor

Up to now the Client and Contractor have been having a field day with lower tax, lower NI, no employee law, no employee benefits etc etc. So the loser has been HMRC and they have had enough.

IF the IR35 changes go through its between the Client and Contractor as to who loses out.

From the Clients perspective, they will no longer be able to cast their net as wide as before to obtain skill sets that they do not have in house on a temporary timeline. Therefore for a Contractor who can still commute (or move) there is scope for a pay rise (supply and demand).

Personally as a contractor I welcome the changes...it will clear the field of people who should be in full time employment.

However I think there may well be a change of heart by the Govt; this will make the workforce far less flexible at a time (BREXIT) where it will need to be more flexible than at any other time in the last 50 years. Who knows what we may have to start doing for ourselves over the next few years???

As an engineering consultant myself, I am getting ££££ signs in front of my eyes with these changes.

 

So you welcome the government making up the rules as they go along to suit whatever they fancy just coz they can ? ? 

People have been so brainwashed by all this nonsense it's incredible. 

What's wrong with a one man band ltd co agreeing to do whatever the end client who is paying their invoices says because - errr - they are paying for it ? 

And doing that for 6 months, 6 years or 6 centuries ? 

Seriously - tell me what's "wrong" with that. I've asked this numerous times - and yet to get an answer from anyone. 

And no - oh because HMRC says so doesn't wash. 

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6 minutes ago, regprentice said:

Not sure. My brother in law is a pipe fitter and was asked to go self employed 15 years ago. Worked for the same construction company ever since as if he were and employee. I think there is a perception in construction that because they work on defined builds for short periods they are. More 'genuinely' self employed. But time will tell. 

Staff in some industries will benefit from the ir35 clampdown. I once had a conversation with a lab technician who told me that the science industries are the opposite to the finance/it industries and contractors are paid half the rate of permie and treated appallingly, but they put up with it in the hope of eventually securing a permanent contract. 

Theres no hard n fast rules.

I am not a tax or employment lawyer!

In your BIL case, does he have his own van n tools?

Does the place where he works changes?

Does he have any position / reporting structure at the contracting company, bar being told go to X?

To me, he sounds well outside.

Ive a famiky mrmber who does what i deffo think is disguesed ft employnent. Same company, same place of work, no sunstition, told what to fo. Yotal tax employment cluster******.

He relues on self employment to pay for travgl n hotgl before tax. Otgerwise ut woukd not be vuablf.

I think hes fukked. Ive told him repeatedly to set up with a 2nd person and have more tgan 1 contract a year. But, no, he listens to the idiot bookeeper who used to only handle offshore oilies

 

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1 hour ago, jiltedjen said:

Why would permies get better rates?

it’s permanent and both sides will pay the tax previously avoided. 

The winner is the government and permies (not directly) in all industries. 

 

Contractors are often (but not always) better paid than permie before you consider tax. When I was a permanent on £55k a year contractors doing the same job were earning 500 a day, probably £115k a year. Most of the contracting websites state a contractor should be on somewhere between 2 and 3 times the permie rate. 

The hope Habaes Domus expressed was, if I understood right, that contractors are going permanent they might negotiate a salary closer the contractor pay than the Permie pay, especially as they have some leverage as in many cases whole teams are threatening to walk off the job in a few weeks. That could force up permie wages as well.

Another way to look at it might be that there is more money left in the pot now the contractors have gone..... So perhaps the permies will get some of it. 

Contractors will argue that some of the benefits permies receive, such as redundancy, paid holidays, sick leave account for the difference. I worked it out in my own situation and I reckoned that a third if the difference could be accounted for that way. The longer the contract goes on the better for the contractor. After 10 years I got £30k redundancy, that was the only 'benefit' to me. I worked alongside a contractor in the same role on £500 a day who took home roughly £600k more than me in the same period. (assuming £500 a day, 46 weeks a year) 

Edited by regprentice
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