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Sadly, all flavours of UK government have had their grubby mitts on IR35 and failed to do anything meaningful with it. Labour introduced the idea (thanks Gordon

Sadly, all flavours of UK government have had their grubby mitts on IR35 and failed to do anything meaningful with it. Labour introduced the idea (thanks Gordon Brown), the Lib/Con coalition did a "review" of it and then the latest Conservative govt got it over the line. HMRC are just responsible for collecting the taxes, not making the laws. Infosys has been doing rather well since the legislation hit the private sector though.

mmarq 4y ago
It was shameful that IT contractors making 800£ per pay paid less taxes than a waiter making 200£ per week. IR35 is probably the only reasonable thing the conservative governments from Cameron onwards have done
- cutthegrass2 4y ago
  I think what a lot of people forget to mention / misunderstand about LtdCo contracting is that, yes you can choose to draw a small PAYE salary and take little to no dividend and pay next to no tax in a particular tax year, if you so choose. However, the surplus funds belong to the business, not the individual, and reside in the business bank account. Should the contractor choose to leave this "profit" in the business, it is taxed according to UK Corporation tax rules. Should the contractor draw this profit down via PAYE or dividends or Directors loans or whatever, it triggers tax events, which will result in tax due on the contractors Self Assessment. A quick run of the numbers from your post on contractorcalculator.co.uk suggests the contractor pays substantially more tax on the income than the waiter, assuming the contractor is running their business within HMRC's rules. edit: forgot to mention corporation tax liability in addition to SA liability.
  - mmarq 4y ago
    The truth is that these Ltds were vehicles to avoid taxes, not real businesses. These contractors were effectively employees that managed to get payed in a way that allowed them to avoid taxation. I know people that payed close to 7% total tax before IR35, as much as somebody earning 15K per annum. IR35 doesn’t prevent real businesses from operating as usual. It prevents masked employees (people that attend standup, have a company email, have an account on Teams, effectively report to a manager, etc…) from avoiding taxes and claiming iPhones and PlayStations as expenses.

mmarq 4y ago

It was shameful that IT contractors making 800£ per pay paid less taxes than a waiter making 200£ per week. IR35 is probably the only reasonable thing the conservative governments from Cameron onwards have done

cutthegrass2 4y ago
I think what a lot of people forget to mention / misunderstand about LtdCo contracting is that, yes you can choose to draw a small PAYE salary and take little to no dividend and pay next to no tax in a particular tax year, if you so choose. However, the surplus funds belong to the business, not the individual, and reside in the business bank account. Should the contractor choose to leave this "profit" in the business, it is taxed according to UK Corporation tax rules. Should the contractor draw this profit down via PAYE or dividends or Directors loans or whatever, it triggers tax events, which will result in tax due on the contractors Self Assessment. A quick run of the numbers from your post on contractorcalculator.co.uk suggests the contractor pays substantially more tax on the income than the waiter, assuming the contractor is running their business within HMRC's rules. edit: forgot to mention corporation tax liability in addition to SA liability.
- mmarq 4y ago
  The truth is that these Ltds were vehicles to avoid taxes, not real businesses. These contractors were effectively employees that managed to get payed in a way that allowed them to avoid taxation. I know people that payed close to 7% total tax before IR35, as much as somebody earning 15K per annum. IR35 doesn’t prevent real businesses from operating as usual. It prevents masked employees (people that attend standup, have a company email, have an account on Teams, effectively report to a manager, etc…) from avoiding taxes and claiming iPhones and PlayStations as expenses.