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Shaun PughOffline

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    Shaun Pugh

    6 days, 18 hours ago

    Interesting news about the budget – I know we don’t do politics in here, but it’s Friday so why not.

    I’m seeing lots of complaints about the scrapping of the 45% rate, and how bad for the economy it will be for the decrease in base rate and NI, but almost everyone has glossed over the whole IR35 thing. Interesting how the MSN works.

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    • Missed it all so far, you’ll have to explain it – IR35?

      • IR 35 is the Revenue pamphlet that deals with “self employed” individuals that only work for one employer. An arrangement used by IT people, and also BBC presenters to pay less tax and national insurance overall.. Tax man has been targeting the arrangements for years

        • That’s the mainstream narrative and the one the media wants you to believe – greedy people in senior roles at the Beeb and in civil service jobs working through limited companies for years and not paying the proper amount of tax. And ironically that’s what IR35 is supposed to prevent, but the way HRMC have implemented it (i.e. badly) is that it meant an effective ban on any freelancer working through their limited company, and instead you had to work through an umbrella company and be taxed as an ’employee’. I use the word ’employee’ because anyone using this arrangement is only an employee for tax purposes, and not for any kind of benefits, in fact you would also be the employer too and pay both lots of NI on the entire earnings – an effective tax rate of around 50% with no employee rights, no sick pay, no holiday pay and usually no notice period, but the customers refused to pay any more. ‘So what, more money for HRMC in tax revenue’ you may think, but that’s only part of the story. There are around 2.2 million contractors in the country, most of whom have been caught by this. By taxing at source in this way it prevents freelancers from being flexible in their location, which in turn makes it more difficult and expensive for customers to find the right skills for projects. It also means the typical business expenses for travel, accommodation, training, equipment (at least £20k per year, per contractor) are now around zero. Mine are, I spend nothing. And that’s the same for every contractor I know. And with over 2 million contractors, even if a quarter are effected and they on average spend £10k a year, that’s at least $5bn that isn’t going back into the economy each year. The true effect has been hidden by the amount of people working remote, but it’s still a load of money that isn’t going into the economy because of this legislation

          • And… on top of that I know of many contractors that just let their limited companies fold after accumulating a load of debt during lockdown as there was no help from the government for us, just the option to take out bounce-back loans, which are unsecured loans backed by the government.

            • Generally unless you have enough that you can move your money off shore, you are going to get financially screwed one way or another…. One of the reason there is a constant muttering of a ‘cashless society’ is that every penny becomes visible along with where you were when you spent it…. If my VPN is working correctly that would be Glasgow 😂🤣😂🤣

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