Here is something most permanent staff commenters and contractors haven't commented on; please read through to the end before getting irate and posting in anger:
Two words: Expenses, Pensions. The new rules and new umbrella rules proposed will mean that inside IR35 (seemingly almost all private sector contractors!) cannot deduct valid business expenses and will eventually be unable to pay into a pension *before* personal tax. When you add all this together it's completely insane to allow this. Nobody will become a contractor, even if he/she is highly suited to the mobility and methodology of working in this way on short term projects.
Are you aware that the dividend taxation on dividends (shares, stocks, Limited Companies) is taxed quite highly now? People are already paying a lot more proportionally as very few have as much money as you think due to the high expenses of travelling around one of the UK's 4 countries for work Mon-Fri (including weekends often!)
I'm a highly paid contractor who has to travel for work for weeks at a time, or Monday to Friday in one of the UK's four countries. Under roles all being inside IR35 and via umbrella I am unable to claim expenses. The *reason* I am paid £700/day is because about £150/day of that is taken up with driving, flights, expenses, food, subsistence that your permie job would pay you *if* you had a good enough permie job. I work on projects for 3/6/9 months and then leave once the milestones are completed.
I am NOT a disguised a member of staff and, quite frankly, have better skills. My type of role is suitable to temporary work and completing complex projects that permanent staff generally have no chance to complete in quick time, as they'd require so much training it would take years to implement and iron out the mistakes made. It is therefore understandable that SME and large corporates hire people like me and others to get projects completed.
Blanket 'inside IR35' and 'no Limited Companies' rules by companies is short-sighted. Who do you think is there doing hours for free to get things fixed/working/projects completed by the deadlines? The permanent staff in everywhere I've been are out the door when they've done their hours; we folk simply don't do that as we have a reputation to protect for the next imminent project.
As mentioned, IR35 will mean people like myself don't travel and have to lower our standards to get a generic permanent job within a short distance of our home. Nobody is going to earn 30% less with no raised day rate AND pay all your own expenses to travel across the UK, being away from your family, friends and other loved ones for days or weeks on end. On top of this you also play the 'employer NICS' (National Insurance Contributions) AND the employee contributions! Companies are now getting away with shoving all the various taxes on to the so called disguised employee to save money. Don't you realise that your permanent job in future is at risk, especially when you move companies? Companies will be less inclined to hire permanent employees and you yourself will be placed on a rubbish FTC (fixed term contract) or on an inside IR35 umbrella arrangement. Just as with private healthcare you *think* you're saving money and using it wisely by avoiding a public health system until you age a bit, inevitably get unwell (we all do, eventually, trust me) and end up paying more out of your savings to cover your cost.
In finality, please be aware that if you earn £50k as permanent staff you actually cost around £100k total for the company. As expert contractors who don't work as disguised staff (I appreciate some do but this private sector implementation is decimating both types of contractor!) we are now forced to face ALL the costs of employing somebody, such as employer and employee NICs, expenses, to the extent that there is no point in doing it anymore outwith our home town area. This actually decreases social mobility and decreases the ability to gain expertise.
I could go and get a £50-£80k job with Deloitte, EY, KPMG or some other company that uses offshore Cayman islands complex arrangement to avoid paying appropriate tax but instead I pay myself via my Limited Company and pay full UK tax on all that money removed from the Limited Company. I also benefit the economy by being mobile and endeavour to work on projects to the best of my ability with a month or two off (rather than intermittent holidays at random) in between contracts.
Beware your permanent staff ire and prejudice because I can assure you that you are next. Right wing political parties wish to move to a more USA-ized system of insecure employment; you can already get sacked without redundancy within 2/3 years. Extended probation periods are used to try keep you on your toes and feeling insecure.
Anybody who's ever worked at HPE/DXC/CSC will know how insecure some IT work can be and how bad an employer can really be, especially American corporates.
At the end of the day we all have a part to play in the IT world and the new rules are forcing us to pay far higher tax as relatively lower to middle middle-class households. We're not rich. If you see some contractor driving a fancy car, first ask if he/she has a family - many don't, perhaps their choice or perhaps dictated by their lifestyle of travelling around in insecure work. Don't forget that humans are humans and often think 'afford' means "I can spend any money in my bank that's there." These new rules will see some bankruptcies but I have little sympathy for those who over-extended their own finances.
If you have any questions please post below and I will answer them as best as I can. I've been doing high profile UK project roles for 20 years in this capacity and so am keen to explain rather than fight.