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    • Paul_Herring
    • By Paul_Herring 15th Mar 17, 2:00 PM
    • 6,195 Posts
    • 2,929 Thanks
    Paul_Herring
    • #2
    • 15th Mar 17, 2:00 PM
    • #2
    • 15th Mar 17, 2:00 PM
    So, self-employed still only paying 9%.

    Are we going to see a reduction in the 12%+13.8% National Insurance the employed (effectively) pay instead, in order to generate the 'parity' this increase was supposed to engender?

    Thought not.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
    • Pennywise
    • By Pennywise 15th Mar 17, 2:26 PM
    • 9,428 Posts
    • 17,150 Thanks
    Pennywise
    • #3
    • 15th Mar 17, 2:26 PM
    • #3
    • 15th Mar 17, 2:26 PM
    So, self-employed still only paying 9%.

    Are we going to see a reduction in the 12%+13.8% National Insurance the employed (effectively) pay instead, in order to generate the 'parity' this increase was supposed to engender?

    Thought not.
    Originally posted by Paul_Herring
    The problem is that there is no parity. Self employed pay less because they get fewer benefits, such as little or no statutory sick pay, maternity pay, paternity pay, and reduced entitlement to unemployment benefits.
    • Paul_Herring
    • By Paul_Herring 15th Mar 17, 2:42 PM
    • 6,195 Posts
    • 2,929 Thanks
    Paul_Herring
    • #4
    • 15th Mar 17, 2:42 PM
    • #4
    • 15th Mar 17, 2:42 PM
    The problem is that there is no parity. Self employed pay less because they get fewer benefits, such as little or no statutory sick pay, maternity pay, paternity pay, and reduced entitlement to unemployment benefits.
    Originally posted by Pennywise
    Indeed there is no parity, but not in the way you imagine.

    For the same job, self-employed tend to get more than their employed peers, just to mitigate, and mainly because of, those reasons.

    For example in software engineering, for two people doing 'the same job', the self-employed one would be on effectively double the 'hourly rate' of their employed peer.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
    • chrismac1
    • By chrismac1 15th Mar 17, 3:52 PM
    • 2,469 Posts
    • 1,460 Thanks
    chrismac1
    • #5
    • 15th Mar 17, 3:52 PM
    • #5
    • 15th Mar 17, 3:52 PM
    It's a tricky one this. A decent employment contract including a decent pension, admittedly a rare bird these days, is worth about 50% more than a self-employment one. So if the person is offered either £40 per hour on staff or £60 as "limited company contractor" he or she is financially being offered the same thing and can choose based on other factors.

    But 2 of my clients have been offered a much worse deal as their "employer" has bottled IR35 on 1 April 2017. So in the above example the deal is either the £60, or £40 but with just 28 days' holiday pay and auto-enrolment pension as the employee benefits.

    If you add that up it comes to 13.07% benefit package - 12.07% holiday pay and 1% pension. So I have advised those people to stick with the £60.

    It's all a mess, largely generated by HMRC bumbling and incompetence since IR35 first came in back in 1998 or 1999.
    Hideous Muddles from Right Charlies
    • agrinnall
    • By agrinnall 15th Mar 17, 4:35 PM
    • 18,760 Posts
    • 14,463 Thanks
    agrinnall
    • #6
    • 15th Mar 17, 4:35 PM
    • #6
    • 15th Mar 17, 4:35 PM
    It's a tricky one this. A decent employment contract including a decent pension, admittedly a rare bird these days, is worth about 50% more than a self-employment one. So if the person is offered either £40 per hour on staff or £60 as "limited company contractor" he or she is financially being offered the same thing and can choose based on other factors.

    But 2 of my clients have been offered a much worse deal as their "employer" has bottled IR35 on 1 April 2017. So in the above example the deal is either the £60, or £40 but with just 28 days' holiday pay and auto-enrolment pension as the employee benefits.

    If you add that up it comes to 13.07% benefit package - 12.07% holiday pay and 1% pension. So I have advised those people to stick with the £60.

    It's all a mess, largely generated by HMRC bumbling and incompetence since IR35 first came in back in 1998 or 1999.
    Originally posted by chrismac1
    Although of course none of that has anything to do with self employment, as you well know.
    • Pennywise
    • By Pennywise 15th Mar 17, 5:04 PM
    • 9,428 Posts
    • 17,150 Thanks
    Pennywise
    • #7
    • 15th Mar 17, 5:04 PM
    • #7
    • 15th Mar 17, 5:04 PM
    I think that this means class 2 won't be scrapped as previously planned. Instead of a higher rate of class 4 and no class 2, we'll just stay with the class 2 and class 4 continuing as they are now.

    All down to poor communication. The media knew and shouted about the increase in class 4 but never mentioned the class 2 saving. Very poor press relations by the treasury.
    • teddysmum
    • By teddysmum 15th Mar 17, 5:25 PM
    • 8,623 Posts
    • 5,098 Thanks
    teddysmum
    • #8
    • 15th Mar 17, 5:25 PM
    • #8
    • 15th Mar 17, 5:25 PM
    I think that this means class 2 won't be scrapped as previously planned. Instead of a higher rate of class 4 and no class 2, we'll just stay with the class 2 and class 4 continuing as they are now.

    All down to poor communication. The media knew and shouted about the increase in class 4 but never mentioned the class 2 saving. Very poor press relations by the treasury.
    Originally posted by Pennywise


    The Treasury can't even communicate within itself.


    I needed the answer to a question and it took my MP two attempts to get the facts. The first person to reply to him just spouted what he'd told them we were already aware of (from underlings)...so he went higher.
    • chrisjtilbury
    • By chrisjtilbury 15th Mar 17, 7:30 PM
    • 2 Posts
    • 0 Thanks
    chrisjtilbury
    • #9
    • 15th Mar 17, 7:30 PM
    • #9
    • 15th Mar 17, 7:30 PM
    The problem is that there is no parity. Self employed pay less because they get fewer benefits, such as little or no statutory sick pay, maternity pay, paternity pay, and reduced entitlement to unemployment benefits.
    Originally posted by Pennywise
    But the self-employed (as their own employer) do not pay employers national insurance contributions - this is about 13.8% in most cases. That's a huge difference which this relatively small 1-2% increase didn't go anywhere near. At least some of those benefits (maternity and sick pay, in particular) are as much about assisting the employer with the costs of supporting their employees, as they are assisting the employee directly.
    • Asghar
    • By Asghar 15th Mar 17, 7:35 PM
    • 118 Posts
    • 62 Thanks
    Asghar
    I think that this means class 2 won't be scrapped as previously planned. Instead of a higher rate of class 4 and no class 2, we'll just stay with the class 2 and class 4 continuing as they are now.

    All down to poor communication. The media knew and shouted about the increase in class 4 but never mentioned the class 2 saving. Very poor press relations by the treasury.
    Originally posted by Pennywise
    Class 2 National Insurance will still be scrapped as planned from April 2018. The chancellor stated this today at the same time when he announced that Class 4 won't be rising.
    • dori2o
    • By dori2o 16th Mar 17, 9:01 PM
    • 7,364 Posts
    • 12,276 Thanks
    dori2o
    It's a tricky one this. A decent employment contract including a decent pension, admittedly a rare bird these days, is worth about 50% more than a self-employment one. So if the person is offered either £40 per hour on staff or £60 as "limited company contractor" he or she is financially being offered the same thing and can choose based on other factors.

    But 2 of my clients have been offered a much worse deal as their "employer" has bottled IR35 on 1 April 2017. So in the above example the deal is either the £60, or £40 but with just 28 days' holiday pay and auto-enrolment pension as the employee benefits.

    If you add that up it comes to 13.07% benefit package - 12.07% holiday pay and 1% pension. So I have advised those people to stick with the £60.

    It's all a mess, largely generated by HMRC bumbling and incompetence since IR35 first came in back in 1998 or 1999.
    Originally posted by chrismac1
    You are aware that HMRC dont actually set any of the legislation regarding UK tax right?

    Legislation regarding tax is set by HM Treasury.
    To equate judgement and wisdom with occupation is at best . . . insulting.
    • dori2o
    • By dori2o 16th Mar 17, 9:30 PM
    • 7,364 Posts
    • 12,276 Thanks
    dori2o
    Class 2 National Insurance will still be scrapped as planned from April 2018. The chancellor stated this today at the same time when he announced that Class 4 won't be rising.
    Originally posted by Asghar
    This whole fiasco could have been avoided if the Chancellor and the press, had made much more of an effort to explain that the rate increase would have been mitigated for the lowest earners by the scrapping of class 2 NIC's.

    At no point in the budget was this made clear.

    Given the black hole which has now been created in the chancellors finances, IMO he will look to recoup this by introducing a 2nd tier to the 'flat rate' state pension.

    Those employed will receive the full rate, whilst I can envisage a lower 'flat rate' for those who have been self employed.

    Alternatively he could reduce the lower earnings limit for class 4 NIC's meaning those who are self employed would pay NI on more of their income.


    What he should have done, and what the past chancellors should have done, is either abolish NIC's all together and increase the basic rate of tax to 25/30%, or, abolish class 2, increase the lower earnings limit so it matches the personal tax allowance, and set the class 4 contributions charge to the same level as class 1 contributions.

    All that has been achieved so far with this U turn is that the hard working employed people have been screwed over again.

    This myth that self employed people deserve to pay lesser rates because they take a form of 'risk' in their work is only true in very limited cases. For the average sole trader the level of risk is very low. They have the opportunity to pay their tax and NI almost 10 months after the tax year has ended, and under the new system that comes in next year will even benefit from fewer penalty charges should they pay their tax and NI late, where as those who are employed have the money taken every week/month with no choice in the matter.

    If you took the opportunity to look into the policy regarding the increase to class 4 NI rather than just listening to the rhetoric being pushed by the press then it would have been clear that there would be little effect in the overall amounts being paid in the majority of cases.
    To equate judgement and wisdom with occupation is at best . . . insulting.
    • agrinnall
    • By agrinnall 17th Mar 17, 8:47 AM
    • 18,760 Posts
    • 14,463 Thanks
    agrinnall
    You are aware that HMRC dont actually set any of the legislation regarding UK tax right?

    Legislation regarding tax is set by HM Treasury.
    Originally posted by dori2o
    Yes, but acknowledging that would have deprived chris of another opportunity for HMRC-bashing, his favourite sport


    Given the black hole which has now been created in the chancellors finances, IMO he will look to recoup this by introducing a 2nd tier to the 'flat rate' state pension.

    Those employed will receive the full rate, whilst I can envisage a lower 'flat rate' for those who have been self employed.
    Originally posted by dori2o
    I agree, and actually I think that would be fair to do that. If the self-employed then wish to kick up a fuss about it they know that the answer is that they need to pay a rate of NICs that more closely matches that paid by the employed (while still escaping payment of employers NI altogether).
    • chrismac1
    • By chrismac1 17th Mar 17, 9:15 AM
    • 2,469 Posts
    • 1,460 Thanks
    chrismac1
    Technically as I havesaid before the Treasury draft the legislation. But it has HMRC's fingerprints all over it, especially the really daft stuff like sticking a thermometer into hot food to see if it is 20% VAT or 0% VAT.

    I don't think this has put any kind of a hole into the finances. That's because there is more to come out from behind the sofa from where the £30bn or so came from since the Autumn Statement 2016. Unless there is a sudden recession, and we've had a long period now without one, the £2bn or so issue created by this NI backtrack will not be any kind of a problem. He could have done a lot more on social care if he had really wanted to.

    This was not a policy failure, it was clumsy politics. If anything the blame lies with the manifesto which had so many promises it just wasn't sustainable over a 5 year term. It was quite a bit more sustainable than Labour's, though, hence the majority.
    Hideous Muddles from Right Charlies
    • Katieowl
    • By Katieowl 22nd Mar 17, 2:19 PM
    • 48 Posts
    • 171 Thanks
    Katieowl
    Am I being thick? I can't get my head around this. I paid class 2 this year, I'm self employed, and have a very small business. I really need to know NOW how much I am going to be expected to fork out for NI next year. So they have cancelled class 2....but NOT Hiked class 4?? So the class 4 rate of £9 a week stands? I have to pay that instead. Did they also move the threshold?
    • molerat
    • By molerat 22nd Mar 17, 2:33 PM
    • 17,481 Posts
    • 11,711 Thanks
    molerat
    Class 2 is still available until April 2018. I don't think anything has been finalised but I believe it will be class 1 & 4 earnings related or class 3 voluntary from then on.
    www.helpforheroes.org.uk/donations.html
    • Katieowl
    • By Katieowl 22nd Mar 17, 4:07 PM
    • 48 Posts
    • 171 Thanks
    Katieowl
    So what do you pay if you earn under £8060? Voluntary class 3 @ £14.10 a week?
    • molerat
    • By molerat 22nd Mar 17, 4:21 PM
    • 17,481 Posts
    • 11,711 Thanks
    molerat
    https://www.gov.uk/government/publications/abolition-of-class-2-national-insurance-contributions/abolition-of-class-2-national-insurance-contributions

    I wonder if this u-turn on class 4 is going to turn round and bite the complainers on the bum !
    www.helpforheroes.org.uk/donations.html
    • Castle
    • By Castle 22nd Mar 17, 8:41 PM
    • 1,307 Posts
    • 1,698 Thanks
    Castle
    So what do you pay if you earn under £8060? Voluntary class 3 @ £14.10 a week?
    Originally posted by Katieowl
    As I understand there's going to be a small profit limit of approx £5,965; so if your profits are between £5,965 and £8,060 you'll pay nothing but instead be credited with NIC's.

    Of course if you only earn £5,964 you'll have to pay Class 3 instead which is £733.20 per year. On this basis, a lot of people may be "inflating" their profits to get to £5,965!
    • dori2o
    • By dori2o 24th Mar 17, 6:39 PM
    • 7,364 Posts
    • 12,276 Thanks
    dori2o
    As I understand there's going to be a small profit limit of approx £5,965; so if your profits are between £5,965 and £8,060 you'll pay nothing but instead be credited with NIC's.

    Of course if you only earn £5,964 you'll have to pay Class 3 instead which is £733.20 per year. On this basis, a lot of people may be "inflating" their profits to get to £5,965!
    Originally posted by Castle
    You don't HAVE to pay voluntary contributions (class 3) if your income is below £5965, but your entitlement to state benefits and the state pension will be affected if your income is below the small profit limit year on year for a number of years.
    To equate judgement and wisdom with occupation is at best . . . insulting.
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