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by bambataa
2253 days ago
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The day rate being higher accounts for the uncertainty. There is also nothing preventing a director paying themselves a monthly salary (e.g £2k) to flatten out the highs and lows. I very much doubt the directors of larger businesses are paying themselves a tiny salary and taking dividends. It seems to be only IT contractors who see it like that. Maybe it’s more widespread than I thought. If you deliberately structure your income to minimise tax you can’t really complain that it also minimises the support available. Edit since you said you’re not complaining. I understand in-IR35 contracts aren’t eligible for furlough? That’s definitely an example of poor implementation imo. |
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Thats partially true, but if you look at outside IR-35 contracts, they might go for £400 / day. While the same kind of work but inside IR35 goes for £600 / day. So HMRC are effectively pushing the burden of a flexible work force entirely on the shoulders of contractors and the clients they work for. This is a huge disruption to both businesses and contractors alike, its also questionable if it will even raise enough revenue for HMRC to make the disruption worth it.
> I very much doubt the directors of larger businesses are paying themselves a tiny salary and taking dividends. It seems to be only IT contractors who see it like that.
You're right, directors of big businesses are paying themselves salaries in the 6 figures and taking out even larger dividends. But for myself, I am usually only in work about 6-9 months a year, I've never worked a contract for more than 6 months, when I'm not in work I spend that time learning and up-skilling to invest back into my career and business. I cannot realistically put myself on a salary of £2k / month when its perfectly feasable that I might be out of work for 6 months or more at any one time. The bottom line is that my working conditions and the benefits I receive (or lack thereof) are much closer that of somebody running a "real" business than it is to a permanent employee, so I should not be taxed as an employee.
> I understand in-IR35 contracts aren’t eligible for furlough?
Honestly I have no idea! I've only ever work outside IR35. I would have thought that inside IR-35 would be comparable to gig-economy workers and sole-traders so they should get 80% of their average earnings over the last three years. But again I am not certain of that.
EDIT: If you're talking about people who work the same contract job for 2+ years and are effectively employed by their client despite working through a limited company, then yes I would agree they are cheating the system. But instead of going after those people, HMRC are making the majority of contractors like myself who are genuinely self-employed, pay for the sins of a minority of contractors who are actually in disguised employment.