Nice article; thank you.
Am I correct in believing that if the off payroll rules are applied to private sector this will effectively mean that on a contract where a contractor is assessed as falling within IR35 by their client: (a) the contractor will be taxed as an employee and that tax will be withheld by the client and so (b) the contractor will be unable to claim any business expenses as tax deductible as they will already have deducted tax on gross?
It is this second aspect which effectively destroys the contracting industry in the UK I think. Few will be able to afford to take a short term contract working in a different location if they are unable to recoup their travelling costs and the costs of living in a hotel or apartment during this time.
The overwhelming ignorance of a government/tax authority that push ahead with this approach after already imposing a dividend tax on those forced to use limited companies by their previous intermediaries legislation which more than “levels the playing field” with employees in Philip Hammond’s disingenuous language staggers me.
Please tell me that I am wrong about the expenses!
Given the hammering PSC users are taking at the moment with the new dividend tax, new VAT FRS rules and changes to T&E, I struggle to see the point in HMRC spending yet more time and taxpayers money on this deeply flawed legislation. There now seems very little incentive for any higher rate tax payer to incorporate since it would seem that one is paying more tax operating through a PSC than as an employee now HMRC have "levelled the playing field" as they so disingenuously and inaccurately put it. Of course the unfortunate truth, which again seems to escape those making the laws, is that many of us are forced by agency rules to have limited companies - ironically with the object of protecting the agent and end clients from being assessed as employers under IR35!
I don't think the opinions of people hoping to profit from new technology are a very good basis for assessing its likely impact. Much of this article reads like a sales spiel for technology firms; clearly it isn't a good tactic to tell your clients that in time virtually everything they do will be replaced!
How do the finance professionals under 36 who welcome AI imagine other professionals will be able to get started on the ladder if the entry level roles are being done by machines?
Does Mr Williams who believes that AI will do the number crunching thus freeing accountants up to perform higher value activities such as "analysis and communication" not understand that those things will also be done by AI - in fact it is the ability to analyse, interpret and communicate which identifies a system as being an AI. Mr Williams also asserts that AI is not capable of building relationships or making judgement calls. Not yet maybe but that is certainly the aim of the companies developing it.
If bright, thoughtful individuals like Carney are raising a red flag, we should all be concerned I think.
I completely agree with the public house building programme but would qualify that to say the government should be building the most ecologically friendly and compact dwellings based on some of the innovative German and Nordic designs or indeed blazing a trail ourselves. We need the affordable accommodation but we need to be innovative in providing it so we don't concrete over what is left of our beautiful nature.
I like your premium London tax idea but I guess it would have to be applied on a reducing scale to avoid a new outer London business belt! We desperately need some good ideas and political direction to reinvigorate the economies of run down and disenfranchised areas of the UK.
A great article Rebecca; I very much agree with the direction you are proposing.
This is an alarming article for contractors working through limited companies. However I believe that the new rules apply only to those working through umbrella companies or limited companies where IR35 applies and furthermore that the rules are about travel and subsistence between home and work not hotel and work for example. As an independent working throughout Europe including the UK, these kind of developments are always worrying as the Revenue always seems to favour a one size fits all approach to a complex business landscape. I am under the impression however that the new rules would not prevent an independent from taking a UK contract and charging travel and subsistence unless they were (a) subject to IR35 or (b) within commuting distance of their home. I would appreciate any commentary on these points.
Northern Ireland has the right approach
What a mess they have made of implementing this tax/charge in England. Clearly if it is designed to reduce the number of bags used then the revenue should not be going to "good causes"; it should be ring fenced and used for cleaning up plastic pollution. Attaching a benefit for unrelated charities to buying bags risks people buying them because the money goes to charity! As for the government taking 0.83p VAT per bag; surely if there is ever a case for something being outside the scope of VAT this is it.
Incorporation still mandatory!
Speaking as an IT contractor I would point out to all the accountants here that for many contractors there is no option other than the limited company route since HRMC's efforts on the IR35 and successor front have had the (presumably unintended) consequence of making employment agencies refuse to deal with any contractor who doesn't have a limited company. Since the agents have the market more or less sewn up, this means that the choice is either "limited company with small salary and dividends" or "limited company with salary and pay double NI". Until the new "dividend tax is raised to the level where one is paying more than double NI I guess the best option will be the dividend route but already it's starting to look as though we are moving from a situation where there were benefits to being self employed to one where self employed individuals are penalised; one can only hope the rates rise to compensate.