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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

to be pissed that a co worker has suddenly got three times my wage and has started avoiding tax

65 replies

underpaidworker · 15/05/2015 18:43

At work another person with the almost identical job as me has just gone to being contractor.

I thought it was just for a few weeks to tidy stuff up but turns our they've signed for a full year!

They now have less responsibilities than me but get paid three times as much. He also is nowpaying less tax and hardly any Ni due to running it through a private limited company. I'm unable to do the same as he is now taking so much of the budget.

Aibu to be seriously pissed off? Less work and more money.

No one else had said anything but I think everyone else is annoyed.

OP posts:

cestlavielife · 15/05/2015 18:45

but that person now gets no paid holiday, no sick pay, no redundancy money etcetc. contracting has benefits and downsides

SpringBreaker · 15/05/2015 18:45

I wouldnt be happy either but unless your wages have been cut then you are no worse off than you were before he changed his job.

LaurieFairyCake · 15/05/2015 18:47

It's your works problem , they're the ones who agreed it and hired him right?

Original poster

underpaidworker · 15/05/2015 18:47

Well I don't get sick pay either, other than SSP but I've never been off for a week. Redundancy money isnt much either.

OP posts:

HeadDoctor · 15/05/2015 18:49

If they're doing essentially the same job but as a contractor it's likely they'll get stung by IR35.

Original poster

underpaidworker · 15/05/2015 18:49

Oh yes it is works problem, can't see why management did it tbh. I can see it causing real resentment in our department.

I'm just pissed at him for gloating about paying less tax and avoiding Ni.

OP posts:

Original poster

underpaidworker · 15/05/2015 18:51

How will they get stung? Can I report the company / him to someone to make sure he pays tax?

OP posts:

carabos · 15/05/2015 18:52

If he's working through a ltd co, which most of us contractors have to do, he will be paying more tax and NI than you as he has to pay employers contributions. Yes we get paid gross and no we don't hand over the tax as soon as we get the money in, but that money still has to be put aside. And as pointed out upthread, there's no sick pay, no holiday pay (so holidays cost the price of the holiday plus the lost earnings) no benefits of any sort. We eat what we kill, so we're pretty lean. It's a great life .

rookiemere · 15/05/2015 18:55

It's still a shed load more take home than a permie carabos and it's a bit disingenuous to pretend otherwise.
Did it in our dept - gave everyone who wanted it voluntary redundancy, then replaced them all with £££ a day contractors, c'est la vie. Can you do the same as your colleague?

Original poster

underpaidworker · 15/05/2015 18:57

Well he says he only pays himself 10k a year and take the rest out as dividend, thus only paying Ni on the 10k. Is he mistaken?

OP posts:

ShadowFire · 15/05/2015 18:58

On the other hand, contractors tend to have less job security. Unless he's got some specialist skill your company really need, he'll be one of the first to be let go if your company's workload takes a downturn. Plus the lack of employment benefits.

And it's not the company's problem if he's not paying enough tax. If he's running a limited company,that's up to him to get it sorted out.

Jackieharris · 15/05/2015 19:03

This is happening loads in my sector.

I'll probably do it too in the future. As long as you don't get sick or pregnant what's not to like about double the pay and half the hassle!

carabos · 15/05/2015 19:22

It's not a shed load more take home than a permie. As I said, the NI is a lot more. If he's misunderstanding the NI and dividend rules, then he's going to be in for a nasty shock.

The structure that really makes a difference is sole trader- but most contractors aren't able to do that, if the contract is their only income.

GERTI · 15/05/2015 19:35

This reply has been deleted

Message withdrawn at poster's request.

DoJo · 15/05/2015 19:56

If he is effectively doing the same job but as a contractor rather than an employee, then he will probably end up investigated under IR35 legislation. That is one of the factors that HMRC specifically look at when determining whether someone is using 'disguised' self employment to avoid tax. You can report them to HMRC if you are so inclined and the company you work for will also be investigated and potentially penalised.

rookiemere · 15/05/2015 20:00

Apologies carabos - I guess it depends on the sector - I know in our sector that you do clear about twice as much even when everything else taken into account DH clears about 2-3 times as much as me.

Theycallmemellowjello · 15/05/2015 20:00

Personally I would want to have a fairly good idea that someone was tax dodging before I reported them to hmrc. Or at least, you know, some basis for believing this. You thinking he should be paying more despite having no idea about the tax code doesn't count. Yabu for considering this frankly.

Theycallmemellowjello · 15/05/2015 20:02

Also, if he was doing the same job as you before, why don't you do what he is doing op?

PtolemysNeedle · 15/05/2015 20:05

My DH did this, it was all completely above board, and HMRC were always very helpful when he had to fill out tax returns.

carabos · 15/05/2015 20:07

When you start out in the limited co you don't pay any tax for ages and ages. It will be approaching two years before anyone would know whether he was dodging tax or not.
If you want to report someone to HMRC who set up a ltd co recently then knock yourself out - you're going to get a fairly dusty response.

PeppermintInfusion · 15/05/2015 20:07

He will have to pay corporation tax, accountancy fees, ltd company set up fees, no pension, no sick pay, no holiday pay (and often you'll get told not to work when it's quiet, eg Xmas), no company pension or other benefits to name but a few things. You also pay tax on your dividends separate from your business. After all that he may end up slightly better off, but really that's a payment for the lack of security... It's fine if you don't take much holiday or if you never need sick leave or anything like that and can manage to stay outside of IR35.
I have worked as both a contractor and employee, by the time you add up pension etc I actually got far more as an employee than I did as a contractor

It's definitely not as clear cut (or as easy) as he thinks!

notquiteruralbliss · 15/05/2015 20:11

OP if you think you are good enough (and versatile enough) why don't you go contract? You will often end up doing jobs that internal candidates know enough to swerve and you will be 'off boarded' (I think that is the current term) if there is cost cutting. However, you won't gave to put up with the internal politics and (if you are able to find back to back contracts) you will be well paid.

Original poster

underpaidworker · 15/05/2015 20:14

Jello I can't as management say there is not enough budget for two people.

I guess he took a gamble by giving in his notice and giving them first choice if they want him as a contractor. It has massively won for him. But the morale of the test of the team has suffered.

OP posts:

MsPerfect · 15/05/2015 20:17

Don't worry about it OP. He has to pay tax on whatever he declares as income and then tax on profit his company makes, then tax on any dividends he pays himself.

If he's thick enough to brag about it you can guarantee he's not going to pay the right tax and then HMRC will come after him.

PetraDelphiki · 15/05/2015 20:21

Plus he may have to register for VAT and get handling that right...and you REALLY don't want to piss off the VAT people!

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