The new dividend tax - does this mean contractors who paid themselvs big divvies

[Deleted User]

caronoel wrote: »

Ever wondered who sits in the first class carriage on commuter trains? Why not if you can write your commuting costs off against tax

I dont use first class. I need to maximise the profit in my company to pay out dividends so I can save money for when I'm not getting paid when I'm ill/out of contract.

isplumm

caronoel wrote: »

Ever wondered who sits in the first class carriage on commuter trains? Why not if you can write your commuting costs off against tax

Good grief - no contractors I know sit in 1st class - it reduces profit which then reduces the dividends you can pay yourself.
Mark

isplumm

TheBlueHorse wrote: »

I think the law should be that you can't hire contractors longer than 6 months or so. Longer than that, and they should be full time employees.

Do you actually understand what you are saying here?

I am a contract PM working on IT projects - most of these are at least a year long and involve a mixture of permanent & contractors.

Companies don't want to increase headcount for projects like this, as it is not financially viable ... so under your rule,

1. they would need to take a whole load of permies on & then get rid later - not good for the company or the employees.
2. Take on contractors, then after 6 months get rid for a new lot - that is going to completely delay the project & not do company any good.

Mark

Pennywise

The problem is of course with the "bums on seats" type of organisation, not the top quality high end stuff. Places like call centres, IT help desks, etc., where the firm don't really care who the person is, they just want a room full of people to answer the phones and sort the problems. They're never "businesses", and ARE merely employees, but both the worker and the firm benefit from using the contractor/limited company model. That's the problem and that's what needs fixing.

I've loads of clients (Ltd cos) working in the bank complaints handling depts for PPI mis-selling etc - there's no way on earth that these people are genuine experts/businesses - they're just wage slaves like the other workers, but the banks are getting away with it by calling them contractors and insisting they are paid via limited companies or umbrellas - the workers themselves would love a proper job - they're not planning on being a business, some have been there 2/3 years. The banks have contrived a contract and working practices which keeps these workers outside IR35.

The new proposals won't target this type of real abuse of the system. Yet, genuine "contractors" who are experts, are establishing a business, etc., could well be badly affected, both by IR35 and the travelling tax relief removal. As always, one badly drafted law being replaced by another badly drafted law.

lisyloo

no contractors I know sit in 1st class

Hi - You do now.
Yes it does reduce profit, but for some people it's worth paying the extra to make their commute/lifestyle acceptable as standard class is cramped at peak times. It all comes down to how you are prepared to live.
You can be judgmental if you like about how others spend their money but do bear in mind that some people are bigger than an economy seat and some people have disabilities where it's painful for them not to be able to stretch their legs out for any period of time.

I can assure you that 1st class is not empty and it's generally populate by well dressed business men (and yes I do mean men).

The 40% (or thereabouts) discounts that some contractors get simply make it more appealing for some.

Note: That if you go to the same place of work for > 2 years or even expect to then you cannot claim travel as a business expense.

isplumm

lisyloo wrote: »

Hi - You do now.
Yes it does reduce profit, but for some people it's worth paying the extra to make their commute/lifestyle acceptable as standard class is cramped at peak times. It all comes down to how you are prepared to live.
You can be judgmental if you like about how others spend their money but do bear in mind that some people are bigger than an economy seat and some people have disabilities where it's painful for them not to be able to stretch their legs out for any period of time.

I can assure you that 1st class is not empty and it's generally populate by well dressed business men (and yes I do mean men).

The 40% (or thereabouts) discounts that some contractors get simply make it more appealing for some.

Note: That if you go to the same place of work for > 2 years or even expect to then you cannot claim travel as a business expense.

Hi,

We are on the same page here ... as a contractor I tend to avoid 1st class - but that is mainly down to the fact that I can get a seat & am only on it for 40 minutes or so - for those travelling into London, I can quite understand why 1st class appeals.

Mark

isplumm

Pennywise wrote: »

The problem is of course with the "bums on seats" type of organisation, not the top quality high end stuff. Places like call centres, IT help desks, etc., where the firm don't really care who the person is, they just want a room full of people to answer the phones and sort the problems. They're never "businesses", and ARE merely employees, but both the worker and the firm benefit from using the contractor/limited company model. That's the problem and that's what needs fixing.

I've loads of clients (Ltd cos) working in the bank complaints handling depts for PPI mis-selling etc - there's no way on earth that these people are genuine experts/businesses - they're just wage slaves like the other workers, but the banks are getting away with it by calling them contractors and insisting they are paid via limited companies or umbrellas - the workers themselves would love a proper job - they're not planning on being a business, some have been there 2/3 years. The banks have contrived a contract and working practices which keeps these workers outside IR35.

The new proposals won't target this type of real abuse of the system. Yet, genuine "contractors" who are experts, are establishing a business, etc., could well be badly affected, both by IR35 and the travelling tax relief removal. As always, one badly drafted law being replaced by another badly drafted law.

Totally agree - I can not work out development contractors who have been with a company for 4-5 years believe they are outside IR35?

As to not been able to claim expenses back from next year - well that will put a damper on me carrying on as a contractor - my question is how can companies like KPMG claim their expenses back against tax, but 1 man bands will not be able to??

Mark

corf999

It it almost certain will be closing my business when my current contract ends.

The lack of stability, working away from home and now the additional tax means it has reached a point where I will be looking for permanent employment closer to home rather than contracts.

I expect this change will push contract rates up.