Increased tax for the self employed

DoctorStrange

Personally, I think that they should remove VAT on PSCs and replace it with an off-payroll tax. Many contractors incorrectly assume VAT covers the ENIC without realising a lot of companies can offset the costs to it's net neutral to HMRC a lot of the time.

Engagers/Clients then choose which they want  - employees (complete with rights, SDC, MOO etc) or contractors (with no rights at all). They pay the ENIC if they want employees, or they pay the new off-payroll tax if they want contractors. 

Then the employee pays his NIC/PAYE as normal, and the contractor pays his Corp Tax/NIC/PAYE/Dividend Tax etc.

It may not be 100% equivalent but we'd be down to the low single digits in differences between employees and contractors, which is the price of no-rights work.

At least that'd increase the tax take without destroying the freelance/contractor sectors entirely (even, as @zagfles says, it leads to a drop in rates)

DoctorStrange

@Pennywise
do you think the "equalisation" then will be to simply increase the self employed NIC of 9% to 11%, and there'll therefore be no impact to Ltd Co contractors (excluding the massive IR35 disruption already earmarked, I mean)?

Mr87

Andy_L said:

Mr87 said:

 I'm not sure how you could make businesses pay NI for contractors unless you are saying they are employed by the business, in which case they should get holiday, sick pay etc just like a normal salaried employee. 

The contractor should be charging enough to cover all those things, in which case the same would apply to increased NI.
 Unfortunatly many companies are fiddling SE to just pay contractors similar amounts to employees and save on all those costs rather than using them to smooth out peaks in demand or fill niche little used skill requirements

I agree with all of this. I fear that the direction of travel is to just bully the little guy: damaging the self employed sector, forcing them into gainful employment, so it effectively becomes zero sum (self-employed taxes are already 'priced in' by clients). Indirectly it becomes a tax on all business eventually. I concur with the sentiment of DoctorStrange.