Add expenses to the mix...
My main client, which is a large insurance company in Edinburgh has announced that they will terminate all contractors that have not agreed to a PAYE contract by 6th January.
Now, whilst local contractors (i.e. those taking a short bus ride to work), this will mean a pay cut around 20%, but for those people like myself who work hundreds of miles from home and have large travel/accommodation expenses that we cover ourselves, this will be hurt far more.
These expenses would still need to be paid, but instead of coming from our limited comapnies pre-tax income (and effectivly transparent to VAT), we would now have to pay that from our personal post-tax income with VAT now added. This makes it more like a 50% pay cut.
Now take into account that partner draws a salary from the limited company as well and closing that would break our whole income model. Hence, I'll be walking when those contract notices come along. If we have to move to PAYE, then it is only possible if you live locally, so this is the end for contractors working away Monday to Friday (assuming firms don't bother engaging with IR35 at all) and reduces the pool of workers they can choose from.