The end of One man band Contractors?

[j.o.s.h.1408]

Read this:

http://www.dailymail.co.uk/news/arti...BBC-stars.html

horrific if it gets the go ahead..!!!

[b0redom]

I take it the removal of T+S has passed you by completely then?

Not necessarily a massive problem in any case, it will just mean more people operating via umbrellas.

[j.o.s.h.1408]

it efffects unbrella companies. not sure you read it correctly?

it means you as a freelancer/contractor have to be on the companies payroll after a month, not an umbrella or your ltd payroll.

[Guy]

Any other sources apart from the mail?

[abaxas]

So 1 month contracts all round.

[peterb]

The Mail has been leading a campaign in favour of the change. They seem to think that one man contractors are tax evaders, completely ignoring the requirement (if you operate through your own limited company) liabilities for Corporation tax and both employer and employees NI contributions (as you are an employee of your own company). There has been a big outcry by the Freelancers association.

This, on top of the reduction in T&S allowances, and the tentacles of IR35 makes me wonder if the Government really is pro small businesses.

[shaithis]

The bottom line is that you are effectively evading tax.

I just finished a 9 month contract and the amount of tax I didn't pay is breathtaking. In fact, from January to April (the first months I was contracting, was permanent somewhere else before that) I am actually due over £400 in personal tax refund, even though I didn't pay any tax over that period and was in effect earning DOUBLE what I was in the months preceding that.

I also could have claimed even more back if I had the neck to keep my receipts over that time and claim back food and travel.

It's a loophole that needs closing.

[peterb]

Y

The bottom line is that you are effectively evading tax.

I just finished a 9 month contract and the amount of tax I didn't pay is breathtaking. In fact, from January to April (the first months I was contracting, was permanent somewhere else before that) I am actually due over £400 in personal tax refund, even though I didn't pay any tax over that period and was in effect earning DOUBLE what I was in the months preceding that.

I also could have claimed even more back if I had the neck to keep my receipts over that time and claim back food and travel.

It's a loophole that needs closing.

Absolutely not. Tax evasion is an offence, and you were not evading tax. You are also responsible for your pension provision, you do not get paid if you are not working and you have none of the benefits of employment law.

You are a flexible resource that can fill short notice or specialist requirements for an established company, at little risk to them. For that you charge a premium. If this measure goes through, it will affect your ability to work as a contractor and also make life harder for businesses that are employing contractors on short (< year) contracts. Of course if you feel strongly about your tax position, there is nothing to stop you making an additional voluntary donation.

[j.o.s.h.1408]

The bottom line is that you are effectively evading tax.

I just finished a 9 month contract and the amount of tax I didn't pay is breathtaking. In fact, from January to April (the first months I was contracting, was permanent somewhere else before that) I am actually due over £400 in personal tax refund, even though I didn't pay any tax over that period and was in effect earning DOUBLE what I was in the months preceding that.

I also could have claimed even more back if I had the neck to keep my receipts over that time and claim back food and travel.

It's a loophole that needs closing.

bottom line is we are not. we pay our taxes and also corporation taxes too.

We also dont get any benefits at all compared to perms etc.

Really there is no loophole. You are just imagining things. By all means increase the tax but to force contractors to turn perm is redicolous

[abaxas]

The problem here is that contractors avoid tax, they don't evade.

Everyone avoids tax. If you pay cash at many outlets you are helping to avoid tax, if you sell something valuable on ebay, car boot sales etc etc.

[j.o.s.h.1408]

The problem here is that contractors avoid tax, they don't evade.

Everyone avoids tax. If you pay cash at many outlets you are helping to avoid tax, if you sell something valuable on ebay, car boot sales etc etc.

yup this is correct

[peterb]

The problem here is that contractors avoid tax, they don't evade.

Everyone avoids tax. If you pay cash at many outlets you are helping to avoid tax, if you sell something valuable on ebay, car boot sales etc etc.

Paying cash to a trader so that it doesn't go through his books so you don't pay VAT actually is tax evasion on your part, and fraud on the part of the trader.

Selling something on EBay as a private individual is a different matter, as no tax is involved.

[abaxas]

Selling something on EBay as a private individual is a different matter, as no tax is involved.

Yes and no. If you are just selling on personal belongings there shouldn't be an issue unless you are selling 100s a year.

Buying something then later selling it on for profit is trading, so taxed accodingly.

All depends on the time between buying and selling and if you make a profit or not.

[peterb]

Yes and no. If you are just selling on personal belongings there shouldn't be an issue unless you are selling 100s a year.

Buying something then later selling it on for profit is trading, so taxed accodingly.

All depends on the time between buying and selling and if you make a profit or not.

Yes, but I did say as a private individual, but you are right, if you are trading as a sole trader, then that income should be declared for income tax. HMRC dislike sole traders even more that contractors operating Limited Companies because they are not required to file accounts.

Limited Companies have to file accounts with both HMRC for the determination of Corporation Tax, as well as with Companies House for the public record.

[b0redom]

@Abaxas, a few better examples are:

Pensions - no tax on those
ISAs as a savings vehicle - no tax on those.

@shathis - as has already been pointed out, that's not tax evasion. As you should be aware, you need to pay corporation tax, employer's AND employee's NI. You may also pay VAT. The additional income you may have earned is to offset the pension, training, risk the client may turn around and say they don't want you for whatever reason the next day, holiday, sick pay, liability and other professional insurances, accountancy fees, contract reviews (you did budget and account for that right because you might find HMRC beating a door to your path if you're found to be inside IR35 and, no you can't then expense the lube).

@josh, I don't see where it says you can't use an umbrella? It says if you're employed as a flexible resource you may have to be taken on as payroll. As I understand it currently, if you are working through an umbrella you are technically employed by that umbrella in the same way that a consultant for Capita, Accenture etc are albeit that you're finding your own work.

I would be REALLY happy if I didn't have to go through a Ltd company, and could be just self employed. It would probably get rid of a LOAD of paperwork for me, but no agencies will touch a self employed consultant, you HAVE to work via a Ltd company.

[ceejays88]

Not good for these one man bands. It can be hard enough sometimes as it is.