From a press release from Randstad (employment/recruitment agency) which landed in my inbox two weeks ago:
* Final legislation on off-payroll working or “disguised employment” comes into force on 6 April and could see contractors’ net take-home pay drop by 20% (1)
* Public sector organisations, having had little time to prepare for the change, are overwhelmingly following the line that all roles will fall within IR35
* Randstad warns of a mass exodus of public sector contractors to the private sector, leading to skills shortages in vital public services (2)
About time too.
It's fair enough if people/businesses in the private sector try and reduce their National Insurance liabilities by dressing up employment as self-employment. National Insurance is a nasty tax, so I have no moral qualms about that, even though in practice I don't recommend it as HMRC usually catches up with you and then it gets really nasty.
But it always horrified me that public sector employers go along with this charade. The tax withheld from wages by the public sector is not really tax, it is a pay cut, that's great news for taxpayers.
1) How on earth they work out that net take-home pay will fall by 20% is a mystery to me. Income tax rates are the same for employees and the self-employed, and Employees' and Class 4 National Insurance on earnings over the upper earnings limit is the same (2%).
The only difference is between Employees' NIC (12.8%) and Class 4 NIC (9%) on earnings up to that limit (so maximum cost/pay cut approx. £1,000 a year). The rules on allowable expenses are a bit more generous for the self-employed than for employees, but in practice, that doesn't make a huge difference.
2) And finally, let's see whether there is a mass exodus or not, I don't see how there can be. MBK tells me that if you have worked in the public sector for a few years, private sector employers aren't interested in you any more. Private sector employers are not going to magically create roles for all of them with their largely untransferable skills, are they?
Forbidden Bible Verses — Genesis 42:1-17
7 hours ago
9 comments:
@MW
"MBK tells me that if you have worked in the public sector for a few years, private sector employers aren't interested in you any more."
As an employer, I can agree with that.
We find ex public sector types (if they apply at all) don't last long when asked to turn up on time, work hard, not take unscheduled breaks, not throw sickies or expect 30 days paid holiday (plus stats), flexi-time or time off for 'in service training'.
Our Eastern European cousins, ex forces types, even ex cons and even recovering addicts tend to get along fine however (we have all these groups in our workforce).
S, I will add your evidence to MBKs. It's two worlds, public and private sector, and never shall the twain mix.
After leaving the public sector, it took me 18 months to find a job in the private sector. Now I know why.
@Bayard
Why?
Well, there is a lot of revolving door movement between the FCA and the financial industry.
Never mind all this, the bad news is that cows are channelling their Trump tendencies http://www.telegraph.co.uk/news/2017/04/15/huge-herd-cows-invade-train-platform-kent/
B, more anectodal evidence, which is started to stack up.
L, is that at the upper levels (corruption) or at the lower levels (expertise)?
G, ta, I have posted.
MW. Both. Upper levels = corruption, see Hector Sants - allegedly.
The grunts fall into two groups - One, those who have usually failed elsewhere - the law, in financial services, etc etc. - and see that a career in the FCA and its companion outfits bureaucracy offers their best chance of a fat pay check, very little responsibility, arbitrary power and not much actual work and generally are too stupid to understand what's what. And two, those moving through who want a stint at the FCA on their CV's.
I have met one or two of the very rare third kind who realised that the the FCA (and I quote) "..is a complete fucking joke mostly staffed by stupid people..." and got out. (I have one of those as an occasional client).
@ Shiney Why? because, I suppose, my potential employers, like you expected that "ex public sector types (if they apply at all) don't last long when asked to turn up on time, work hard, not take unscheduled breaks, not throw sickies or expect 30 days paid holiday (plus stats), flexi-time or time off for 'in service training'."
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