Both contractors and Ltd companies have a significantly higher level of risk
No they don't. When banks make cuts backs we reduce the rate paid to contractors by 10% and cut 10% of the FTEs. The latter is more risky.
lower level of guaranteed benefits than employees
On paper they do, but that word "guarantee" doesn't mean what you seem to think it means. Employment rights only matter a jot if you are willing to go to court to enforce them. The problem with doing so is that you are very likely to make yourself unemployable in doing so. I've never worked for a large company that did not have a tick box for "Have you ever sued a previous employer for any reason?". They're not asking so they know to give you a pat on the back.
the relative tax and NI rates reflect this
No, they don't.
Its no good the commentards on El Reg getting their panties wet over public spending cuts to balance the budget, while simultaneously decrying paying a rate of tax that everyone else already pays. Someone has to fund the deficit spending and that someone can't just be PAYE again. Contractors are going to take a sizable hit this time around.
A contractor bringing in 50k gross and an FTE bringing in 50k gross have such disparate bottom lines, with the FTE paying several magnitudes the tax the contractor pays, which leaves nowhere to hide and little sympathy from most voters. The difference becomes even more marked once you gross over 100k in each employment type.
To the public, you are Amazon. You're not perceived as paying your fair share. Sorry if that upsets, but that's basically why you're going to get walloped for tax next year.
Biting the hand that feeds IT
