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Medical consultants / doctors all bar a few are also PAYE
Bails - when I reffered to consultants I of course meant medical professionals. perhaps not clear enough.
Bails - when I reffered to consultants I of course meant medical professionals. perhaps not clear enough.
Me too.
Although when I said "all employed through Ltd companies" I wasn't being clear either, I didn't mean that all consultants were using that arrangement.
The majority of (medical) consultants will be on the payroll as an employee, but many of the agency/locum consultants will be 'engaged through a limited company' which means they fall foul of the IR35 changes. And I'm not saying that from a London trust.
I'm a public sector manager, and have a temp in my team, recruited through an agency, to do a specific piece of work for a year. The temp is paid through a company and has some work with another public sector body. I've been told by the agency that IR35 applies, so pay will be subject to tax & NI at employee rates. For those of you who understand such matters, does that sound right?
Ransos - possibly! In my mind it seems that if the work is deemed as 'equivalent to employment' then IR35 and PAYE tax applies- so a 'temp' or a 'contractor' might be in, but a 'consultant' (not a medic) might be out. There used to be tests like whether they could use the staff canteen, had to fill in a timesheet, provide their own tools/laptop and the like. They were rubbish and got discontinued...
For those delivering a product or output but retaining control of the work and methods used, then they shouldn't be included, but it seems that the problem people fear is that we'll all be bundled in together.
Were IR35 to be applied incorrectly, what do you reckon the chances of getting tax back via the tax return are? NI almost definitely not (once paid it's paid), but I wonder about personal vs corporation tax for Ltd. Co. consultancies.
Does seem to be a little close to the wire for so little clarity...
From 6th April it should be you, the PS client, that decides whether in/out. But tbh under the new rules it'll be next to impossible to be out.
Thanks both. "We've" decided that IR35 applies, but of course the organization is a cautious entity - I was trying to get a little clarity. It seems that confusion reigns.
It does seem pretty unfair to pay employee levels of tax without receiving employee rights such as a pension and holiday pay.
Contractors should be getting more pay to compensate for lack of pension and holidays, not paying less tax.It does seem pretty unfair to pay employee levels of tax without receiving employee rights such as a pension and holiday pay.
Contractors should be getting more pay to compensate for lack of pension and holidays, not paying less tax.
Well that's what we're expecting, isn't it? Contractors will put their prices up to compensate, and the additional tax revenues will be offset by additional public spending.
ransos - I meant HMRC rather than you when I was talking about clarity, sorry.
It sounds to me that you temp is probably 'in'. You haven't said what they do, but your phrasing seemed to imply they'd be getting instructions and a supply of work from you, rather than a request to produce something then left to it? In their position I'd be seeking to ensure the day rate addressed sick and holiday considerations (so would be a different number than someone's salary divided by the number of days).
Part of the problem is the different styles of contracting seem likely to all be lumped in together by (rightly) cautious public bodies.
And the reason employers use us is that unlike their perms we come in and get the job done
Then us perms have to go in and put the **** up right 😀
Not quite what I meant. They [i]should[/i] already be getting a higher wage to compensate for the lack of benefits but also [i]should[/i] already be paying tax on it. If their wages are about to drop its because they are tax dodging/avoiding (delete as applicable) through a loophole that is about to be closed, or more likely moved once another way to avoid tax is foundWell that's what we're expecting, isn't it? Contractors will put their prices up to compensate, and the additional tax revenues will be offset by additional public spending.
Here we go, this is the kind of thing I was describing last week:
[url= https://www.theregister.co.uk/2017/02/27/contractors_begin_mass_exodus_ahead_of_ir35/ ]CLICKY[/url]
The full effects won't come home to roost for ~six months though, when the personnel losses really bite.
I'm sure the likes of Capita, Accenture and the Indians are preparing to step into the breach..,.. though not sure how that's going to help a)the tax intake, and b) the cost of services
Many employers are likely to play it safe and say "in", which obliges them to deduct tax from your invoices almost exactly like a PAYE employee. They don't need to give you any of the benefits of being an employee though.
The tax loophole is not there to compensate for lack of employee benefits. Higher rates of pay compensate for lower security and benefits. If you don't think it's enough then the market says you should walk. If your employer doesn't want you to walk then it should offer you more pay, not less tax. Tax should be based on your earnings.
"[i]Tax should be based on your earnings.[/i]"
Easy to say, harder to nail down in a completely watertight legal way. Contrary to what a lot of people here seem to think, the tax laws are not designed purely to give unfair advantages to contractors, they were built for "real" businesses and then taken advantage of by individuals choosing to operate as limited companies.
The complete raison d'être of a limited company is to legally separate the company and the owner. "Limited Liability". The earnings of the company (i.e. its turnover) [b]are not[/b] the earnings of the owner/director. The two are separate legal entities. IR35 is attempting to blur this. The company has running costs, the company pays corporation tax on its profit. Any remaining profit can be distributed as dividends, or reinvested in the company, or just held as cash in the bank. It's not the owner's special piggy bank and there are already rules in place about taking loans from your limited company. For a "normal" company (a shop, or a factory, etc.) this all works perfectly well. A limited company with only one employee who is also its owner, that only works for one client, follows the same rules because legally it's the same. That's what is being changed.
It's all about the dividends. Until FY15/16, dividends to basic rate taxpayers incurred no additional tax. Higher rate was 25%. That 0%/25% compared to 20%/40% if the same money had been paid as salary. That's a big difference. Plus there's no NI on dividends. This made it very attractive to pay yourself mostly in dividends rather than paying all of it as salary.
If this was just about raising more tax revenue it could be fixed very quickly by aligning dividend tax rates with income tax rates, and charging NI on dividends. It would all go through your self-assessment with virtually no effort required on HMRC's part. No IR35 in/out quandries. No additional hassle for agencies doing tax calcs before paying invoices. Problem solved. But it would hammer people with large investment portfolios who receive dividends from them. I imagine a lot of senior government folk have large investment portfolios 😉 So it's preferable to target those nasty tax-avoiding contractors with a complicated and costly workaround that will eventually backfire.
https://www.tax.service.gov.uk/check-employment-status-for-tax/setup
[b]The intermediaries legislation does not apply to this engagement[/b]
😀
Except it should be the public sector end client that needs to run the ESS, or am I wrong?
Contractors will put their prices up to compensate, and the additional tax revenues will be offset by additional public spending.
NHS provider side caps mean this is very unlikely.
As an aside - It's a disgrace that contractors & perms alike can rake it in by working on commissioner side (or in other non-provider orgs.)
You listening TJ? An NHS contractor who actually gives a shit 😛
Except it should be the public sector end client that needs to run the ESS, or am I wrong?
It can be run by worker, agent or end client.
[I]It can be run by worker, agent or end client. [/I]
I'm aware that it has 3 options (just been online to take a look), but since it's the PS client that decides whether a role is in/out (and the agency won't take the risk of saying out, and then been declared in as they'd have to pony up the tax/NI) it's a bit pointless anyone else using the tool as you've no idea how they are actually going to answer the questions (and these are linked, so change depending on how the questions are answered).
Again, don't be needing to attend A&E over Easter...
[i]A limited company with only one employee who is also its owner, that only works for one client, follows the same rules because legally it's the same. That's what is being changed.[/I]
We've two fee-earners working across multiple clients, and get treated the same as we're 'only' selling our expertise - it's all about the tax-take IMO.
you've no idea how they are actually going to answer the questions
I know what the working relationship is with my client and can answer the questions on that basis. If I wasn't able to confidently answer the questions then I'd definitely be within IR35. Even the tricky one about substitution has been considered in discussions over the past few weeks to reach a shared understanding.
I guess it depends very much on what [s]work you do[/s] services you provide to your client.
YMMV
[I]I guess it depends very much on what work you do services you provide to your client.
YMMV [/I]
Yes, I'm aware of that, see post above as we're not hidden-employees like many.
One thing is quite apparent, it's yet another exercise with unintended consequences - the public sector will come out of this showing yet again its inability to actually get work done efficiently, economically and to quality.
And others will get the blame for their failings, ie us money-grabbing contractors won't work with them, rather than their 5h1t management and HR abilities.
B r, is that really the public sectors fault though? If the going rate for a particular role is £800/day then the public sector will likely have to pay £1000+ in order to give the contractor an equivalent take home amount. But they are (in the NHS at least) subject to limits on agency/contractor spending, so they might only be allowed to pay £300. Unsurprisingly, that won't get the best people for the job, but that's because of central rules imposed on them.
And the "money grabbing contractors" bit, while completely understandable and rational, is true in many cases. You could be a contractor working through a limited company/agency on £500 per day. Or you could be a permanent/fixed term employee on £30k p/a. Lots of people, quite sensibly, choose to have more money in that situation. It's not a hospital's fault that people can earn more money elsewhere.
It's all about the dividends. Until FY15/16, dividends to basic rate taxpayers incurred no additional tax. Higher rate was 25%. That 0%/25% compared to 20%/40% if the same money had been paid as salary. That's a big difference. Plus there's no NI on dividends. This made it very attractive to pay yourself mostly in dividends rather than paying all of it as salary.
The dividend tax is after corporation tax has been paid so actually it's the same as income tax. The difference is the lower or no NI but those gains have largely gone now.
Why would you work an extra 10hrs on top of a 50+hr week for then 50% to be taken off you
Because that's how tax works. They're not exactly pillars of society if they're avoiding tax on a massive level, any more than we consider expense fiddling politicians or big companies with offshore tax affairs a good thing.
Not quite what I meant. They should already be getting a higher wage to compensate for the lack of benefits but also should already be paying tax on it. If their wages are about to drop its because they are tax dodging/avoiding (delete as applicable) through a loophole that is about to be closed, or more likely moved once another way to avoid tax is found
I understood what you meant, and don't necessarily disagree. My point is that the claimed increase in tax revenues from higher wages is government spin: either public spending will increase (higher wages), or services will be cut (work doesn't happen).
Hmm, these contractors, they're gonna be needing them it seems...
The report also said the government would need to retain all its staff and new recruits until the 11th hour of the two-year exiting period to “manage last-minute changes”, suggesting a significant increase in the number of civil servants employed for the remainder of the parliament.
There's a ton of reorganisation work in the NHS to be done re Breixt on top of BAU and whatever constant reorganisation work is already underway.
No idea what happens when we send 'them' all home - hopefully all these pure-bred British people who's jobs have been 'taken' are qualified medics & clinicians.
[I]I reckon the initial 'hit' will be the Easter weekend, just long enough for them to have had their first invoice paid at net and it dawn on them what it means. [/I]
My crystal ball was working well it seems...
https://www.thetimes.co.uk/article/strike-threat-locums-not-fit-to-be-doctors-q5xxz62ls