Pensions

[Eggtastico]

Re:Pensions

sack your employees & take on contracters.. give them a hefty pay rise.
No more pension fund & no more employees national insurance.
No more holiday pay either

so make them all self employed? thats a really good idea tbh

Most companies do this already. My old company had about 50 or 60 sales staff, all self-employed.

Think there is something in the works to put a kybosh on it though no? IR35? Means if contractors are working for a regular employer... then theyre classed as employees and end up getting screwed tax and NI wise.

not really screwed.. they just have a lot of tax dodges taken away from them - the biggest being paying themselves minimum wage & then taking the rest
as dividents.

[M3ta7h3ad]

Pensions

Id say paying 12% more tax than a normal employee is screwed.

[Eggtastico]

Pensions

Id say paying 12% more tax than a normal employee is screwed.

no - you need to look into how things work


selfemployed - you pay TAX & National Insurance Stamp - which is fixed weekly amount no matter how much you earn
contractor - you own a ltd company pay Tax, Pay National Insurance & pay employees National Insurance
However, most people then employ themselves on a low rate (minimum wage) & take the rest of the money as dividens.
So instead of paying 20 odd % TAX or 40% tax, they pay 10% or 32.5% - say the company "makes" £50k - instead of paying all that
as a "wage". You pay yourself a fixed wage of say £15.750k & pay the basic Tax rate, then the other £34.250k is paid as a dividen, which
means youd pay 10% tax - before labour took away the 10% tax rate for low earners, you could pretty much take that £50k & only pay 10% tax for
most of it. - IR35 is what closes this loophole, but as everyone will be contractos & no perm. staff - there is nobody to compare their job to, so wouldnt
fall under IR35. - Also theres business expenses.. Parking, Bridge Tolls, Congestion charge, Tools, Equipment, Anything thats to do with your Job
you can get tax relief on.. Computer, SatNav, etc. - as long as you can prove its for the business & business use.

Lets put it another way.. What % of your monthly wage do you actually get? I get over 75% - I lose 25% in taxes, Employers  & Employees NI contributions.
I bet your lucky to see 70%

So... whos getting screwed?

[Clock'd 0Ne]

Re:Pensions

My accountant has put me on exactly the scheme Egg highlights above.

[M3ta7h3ad]

Pensions

Id say paying 12% more tax than a normal employee is screwed.

no - you need to look into how things work


selfemployed - you pay TAX & National Insurance Stamp - which is fixed weekly amount no matter how much you earn
contractor - you own a ltd company pay Tax, Pay National Insurance & pay employees National Insurance
However, most people then employ themselves on a low rate (minimum wage) & take the rest of the money as dividens.
So instead of paying 20 odd % TAX or 40% tax, they pay 10% or 32.5% - say the company "makes" £50k - instead of paying all that
as a "wage". You pay yourself a fixed wage of say £15.750k & pay the basic Tax rate, then the other £34.250k is paid as a dividen, which
means youd pay 10% tax - before labour took away the 10% tax rate for low earners, you could pretty much take that £50k & only pay 10% tax for
most of it. - IR35 is what closes this loophole, but as everyone will be contractos & no perm. staff - there is nobody to compare their job to, so wouldnt
fall under IR35. - Also theres business expenses.. Parking, Bridge Tolls, Congestion charge, Tools, Equipment, Anything thats to do with your Job
you can get tax relief on.. Computer, SatNav, etc. - as long as you can prove its for the business & business use.

Lets put it another way.. What % of your monthly wage do you actually get? I get over 75% - I lose 25% in taxes, Employers  & Employees NI contributions.
I bet your lucky to see 70%

So... whos getting screwed?

Except as I see it IR35 will intervene if you end up being a "contractor" for one firm or in fact are more like a non-employed employee of that firm. So Sales staff at my old company, signing contracts saying that they can only represent my old company however they are working as contractors, will get screwed by IR35.. leaving only the expenses route to dodge any tax.

12% extra tax, is still 12% extra tax. If you avoid the IR35 legislation then great for you. Not everyone will.

[Eggtastico]

Pensions

Except as I see it IR35 will intervene if you end up being a "contractor" for one firm or in fact are more like a non-employed employee of that firm. So Sales staff at my old company, signing contracts saying that they can only represent my old company however they are working as contractors, will get screwed by IR35.. leaving only the expenses route to dodge any tax.

12% extra tax, is still 12% extra tax. If you avoid the IR35 legislation then great for you. Not everyone will.

well you better explain where this 12% extra tax youve invented comes from.
If they are sales, then they may not have a basic salary & all they probably do is sell their leads to your old company - like a commission.
This may avoid IR35 - probably acting more like agents than sales staff.

For what its worth, I fall under IR35 & I still take home of my pay, than I would if I was permmy.

[M3ta7h3ad]

Pensions

Sorry misread something, its 20% not 12.

http://www.contractorcalculator.co.uk/what_is_ir35.aspx

A contractor caught by IR35 will typically receive 20% less in their pocket each month than a contractor who falls outside IR35. For a contractor on £40 per hour this equates to around £800 per month.

[Eggtastico]

Pensions

Sorry misread something, its 20% not 12.

http://www.contractorcalculator.co.uk/what_is_ir35.aspx

A contractor caught by IR35 will typically receive 20% less in their pocket each month than a contractor who falls outside IR35. For a contractor on £40 per hour this equates to around £800 per month.

thats IR35 contractor V non IR35 contractor

not IR35 contractor V perm employed person

and what that basically means that an IR35 contractor cant pay themselves dividens which is where the big Tax Dodge is.
So instead of paying himself a low salary & taking dividens, he has to pay full tax on all his earnings.