Forgot NI? @elsergiovolador
IR35 is, and always was, about recovering lost National Insurance.
While it is true that the minimal PAYE and Corporation Tax is very close to the rate of Income Tax that would be paid, the NI loss, which when you consider is something like 25% up to about £36,000 once you take into account both employers and employees NI (and at least 15% above this) is quite a significant amount.
Contractors conveniently overlook this when they talk about tax, and I've always been upset about it, as I was a contractor, and am now a contractor working through an umbrella (and have been for many years).
It does not matter how you dress it up, there were financial benefits working through your own company.
Many moons ago, when I ran my own company, I used to pay myself the money I needed to live on through PAYE, paying the appropriate income tax and NI. My contractor friends thought I was mad, but I feel that I was just being ethical and responsible. After all I was still taking home more that I would have been as a permie.
But what successive governments have done is effectively destroyed this way of working, by taking away pretty much all of the financial benefits and allowable expenses (another thing that is not part of IR35, but still erodes what made it possible). It would not surprise me if it were near impossible to find a specialist IT contractor willing to do more than 6 months or so on a contract, and also be unwilling to work any distance away from home unless it really was an outside IR35 contract or the rate is significantly higher than it used to be.
Biting the hand that feeds IT
