Reply to post: Re: Two things

Industry reps told the UK taxman everything wrong with extending IR35. What happened next will astound you

d3vy Silver badge

Re: Two things

"Contractors do get a safety net with all those benefits. In fact the benefits can be unlimited"

Yes..but as I pointed out in the comments on the other IR35 article:

Yes, contractors can and *SHOULD* be making these provisions themselves within their companies, I leave around 40% of the monthly net profit in the company at the moment to cover pensions, sick pay, holiday pay etc - not all contractors do this, im my opinion they are short sighted, but that is their choice to make.

Many don't mind tax reform for contractors - honestly because I leave so much in the company "for a rainy day" my net take home actually goes *up* inside IR35 because I am forced to take all of the funds immediately instead of leaving them for when they are actually needed [1], what gets me is the loss of ability to claim travel expenses [2] and the loss of benefits - let me elaborate on the loss of benefits :

The way that IR35 works is that if I am deemed to be "inside" then my company will not earn any income from my engagement with the client [3] instead my client will pay an umbrella company [4] who will pay the relevant tax and NI to HMRC and then pay me the remainder.

This means that when I am engaged inside an IR35 contract my company does not have an income with which to make provisions for sick pay, holiday pay or just time that I'm out of work (Through choice or not).

That is the issue that people have, its not just that we will be taxed as employees but without the benefits, working inside IR35 effectively removes our ability for our companies to provide these benefits to us.

1. Effectively deferring the tax until I actually have the need to spend the money - same way as anyone with a pension effectively defers the tax from the point of saving until they draw it.

2. I travel 120 miles a day because my client can't get perm staff who live near by, Ill just find work closer to home from April 2020 and save £400 a month on fuel.

3. Actually there is a 5% allowance to cover accountancy fees and similar expenses.

4. Or they can choose to put us on their own payroll, but I doubt many will want that admin overhead.

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