Self employed contracting - how does it work?

ToneControl

BluesLover said:

Thanks to the onset of IR35 the good days of contracting are over. I'm now staff, after contracting on and off since the 1980s, and detest it. I don't think contracting rates will rise, because companies don't seem to have budgeted for it in their estimates for future projects. Government and HMRC are trying to get everyone to pay the same tax whether staff or not. None of of it has been thought through, and it's a total mess. Be very careful you don't end up with a massive NI and tax bill.

Umbrella companies remove a lot of advantages of course
I was thinking that if employers switched to payroll-based fixed term contracts, they'd be saving 20% VAT, so should be able to bump up pay

Anyway, we'll see what happens soon enough. Personally I think companies will have to find the extra cash if there is a shortage of the people they need. Who knows how many have retired or gone permie? 

prowla

Contracting is like permanently working your notice and not knowing whether you'll still be there in a month's time.

prowla

ToneControl said:

BluesLover said:

Thanks to the onset of IR35 the good days of contracting are over. I'm now staff, after contracting on and off since the 1980s, and detest it. I don't think contracting rates will rise, because companies don't seem to have budgeted for it in their estimates for future projects. Government and HMRC are trying to get everyone to pay the same tax whether staff or not. None of of it has been thought through, and it's a total mess. Be very careful you don't end up with a massive NI and tax bill.

Umbrella companies remove a lot of advantages of course
I was thinking that if employers switched to payroll-based fixed term contracts, they'd be saving 20% VAT, so should be able to bump up pay

Anyway, we'll see what happens soon enough. Personally I think companies will have to find the extra cash if there is a shortage of the people they need. Who knows how many have retired or gone permie? 

The client's wouldn't really save the VAT, as the amount they pay the contractor is simply deducted from what they owe HMRC; if they do away with the contractor then they just pay it to HMRC instead.

ToneControl

prowla said:

ToneControl said:

BluesLover said:

Thanks to the onset of IR35 the good days of contracting are over. I'm now staff, after contracting on and off since the 1980s, and detest it. I don't think contracting rates will rise, because companies don't seem to have budgeted for it in their estimates for future projects. Government and HMRC are trying to get everyone to pay the same tax whether staff or not. None of of it has been thought through, and it's a total mess. Be very careful you don't end up with a massive NI and tax bill.

Umbrella companies remove a lot of advantages of course
I was thinking that if employers switched to payroll-based fixed term contracts, they'd be saving 20% VAT, so should be able to bump up pay

Anyway, we'll see what happens soon enough. Personally I think companies will have to find the extra cash if there is a shortage of the people they need. Who knows how many have retired or gone permie? 

The client's wouldn't really save the VAT, as the amount they pay the contractor is simply deducted from what they owe HMRC; if they do away with the contractor then they just pay it to HMRC instead.

I see your point, but not all employers collect VAT on sales (e.g. the public sector)