AIBU to resent my agency social worker colleagues?

[jollo]

I'm a social worker. Work alongside 'agency' workers who are paid between 25-30 quid an hour, have a 'LTD company' set up and pay themselves £11,000 a year, claim working tax credits, and squirrel away the rest. 'They also get agency bonuses of £500 at xmas and for staying with them for a year...

This is the public sector of today. I'm paid £34,000 a year. They cost minimum of £45,000 and have the gall to claim tax credits!

I know loads of people whose husbands 'contract' (in various roles) and have got them signed up as employees so they get the tax break, pay them little/nothing (not claiming tax credits) but swanning round in 'company cars' and paying fuck all in tax.

There'll be hundreds if not thousands of them on here I'll wager...

hod they will be signed up as company secretaries and share holders, and dividends will be paid to utilise their tax band. No difference to a SAHM mum or part time spouse (as two examples) transferring some of there taxable allowance to their partner who is employed.

My accountant doesn't recommend buying company cars though for a small contractor company, its a pain in the arse. I do get 55pnper business mile back as an expense though, which is more than it cost me in petrol and depreciation, so that's probably why they drive fancy cars..

Sometimes they will be out of work though. Hence why everyone doesn't do it.

I'm under an umbrella company so from my wages I pay agency fees, umbrella fees, 2 lots of NI (employers and employees) and the usual tax.

I don't get holiday pay, sick pay or pension. The government removed the entitlement to claim home to work travel mileage last year too. My contracts are usually short in duration so have the anxiety of how long I can pay bills if I'm given a weeks notice or my contract comes to an end without another in place (single parent with DCs).

I'm not entitled to WTC. My CTC was stopped in January for this year as I'd been overpaid as it's really difficult to calculate what I would earn in a year. I may work all year or have gaps.

I would love the security of a permanent job but it hasn't happened. What I'm trying to say is that it's not as lucrative as you believe it is.

Underpaying yourself to dodge tax and claim tax credits isn't illegal. It's amoral, but the self-employed people who are concerned about morality usually work out of a sole trader account (not a ltd company).

If they're really earning what 10k more than You, you need to look at other areas of the public sector where contractors are earning far more than 30 or 50% more than their permanent colleagues! That'll make you combust.

Similar situation in a medical role. We currently have two locums, I don't know their exact pay and tbh don't want to know as it would be depressing but it's going to be at least 3-4 times what I'm on per hour! This is being paid for by the NHS to keep up with waiting lists falling behind due to our department never having enough staff on the payroll.

If our salary was more attractive in the first place then maybe we wouldn't get so many ppl training to do a highly skilled job and then leaving the NHS and working for the private sector earning £££ at tax payers expense. As a PP said, I don't resent them but I do resent the system that causes this to happen.

Yes, IR35 details the changes.

I don't understand how they can be receiving working tax credits?

Anti and others who don't understand, I don't blame you, it's very complicated, in a very none patronising way, As honestly I really only know this because I am a director and have sought advice for multiple accountants! To break it down:

You form a Ltd company and become a director
You are the sole employe and director or the company
You find short term jobs that pay more than a permeant job for the same hours
The amount it pays more is equal to the wages and the other costs that the hiring company pays for any employee (such as pension, holidays, NI, sickness etc)
As a director the amount of money the company earns is not your income, it's only income if: you take it as a salary via your accountant or through a self employed tax return, or a combination of the above plus dividends.
"You" could be earning £500 a day, it if you leave it in the company your only liable for corporation and vat
If you take it out your have to pay dividend tax, NI etc etc depending on th m thidnyiu chise to pay yourself
Therefore you could work every day of the year and be earning £500 a day, legaly not your money though, it's your companies. So if you chose to pay yourself NMW you can very legally claim benefits too.

However it would be more ethical, tax efficient and you would get more money if you just paid your self a good wage..

To claim tax credits and pay yourself a shit wage these days isn't very tax efficient and is a bit silly

It all evens out don't be resentful.

marmalade I don't want the job insecurity of potentially being given a week's notice.

Op I missed this yesterday. If you had wrote, "I don't want to do it because I believe it is immoral," you might have been just about reasonable in your resentment up there on your high horse.

But are you really resentful of their immorality or just resentful that you don't have the guts and gall and business acumen to do it too?

But the bit I don't understand is how they're keeping tax credits. They must be doing self assessments which will identify their dividend income (and they will taking this in most cases- I can't believe anyone would just let it disappear into retained earnings year after year as it would make no sense)

IR35 will be compulsory from 1st April. It would make minimal difference if they are conducting their tax affairs properly at the moment and are not high earners. But witht the introduction of IR35 the responsibility for assessment of whether someone is an employee or not will sit with the organisation, not the individual.

I would suggest that agency social workers are highly likely to be considered employees, and actually they should be assessing themselves as such at the moment and paying tax accordingly. However the majorly of people with PSCs assess themselves as not being an employee and just pay corporation tax instead of PAYE. This makes minimal difference if your salary is under the higher rate tax limit. It has more of an impact for high earners.

Keep it in retained earnings until Tax Credits no longer exist, or joint earnings too high and then release it?

I suppose using it as a savings pot so to speak?

marmalade I don't want the job insecurity of potentially being given a week's notice

Which is exactly why they are paid more.

You're just jealous, simple as that. They have more money than you and you think its unfair.

I am a contractor with my ltd company.
I don't claim Tax credits, but I pay myself less than what my company earns every month, and therefore am able to continue to pay myself when I don't work (breaks after have DC for ex).
So basically instead of paying a lot of income tax when I work and nothing when I don't (but not getting any benefits because of DH's salary), I pay a minimum percentage of income tax all the time. Which is beneficial to me.

Is that immoral?

OP, you seem to be jealous of your colleagues but you wouldn't want the insecurity of being a contractor. In other words because you'd rather be employed, you feel that everybody should be. YABU

But you can't just draw down retained earnings easily and even so- why would you keep the vast majority of our income locked away for years on end? You'd also need to pay corporation tax on your profits. Retained earnings make no sense

no i don't think it's immoral personally, you've spreading your earnings over the months you'd otherwise have no income. If people don't like contractors due to them not being able to fully do the job due to IT restrictions etc that's an issue with the employer surely, not an individual moral failure - some people will take more risk, some won't.

Isn't the bigger problem that when a problem arises, those in such positions can just leave and not face disciplinary action? I think I'd be more concerned about that, and the detrimental impact on vulnerable people, not how much a colleague is paid (esp if it doesn't work out differently as many here have said).

I love the notion that there might be cuts in children's services. Need is rocketing upwards and LAs are protecting budgets as far as is possible

The only insecurity is if you are crappie at your job and even then many LAs keep them on because having someone doing something is better than noone doing nothing

The is a numbers problem. Not enough social workers, poor retention and not enough money to buy more because it is all spent on expensive agency workers.

YABVU. Even in an ideal world there would still be agency staff; people need to take maternity and sick leave. If there are too many agency staff and not enough permanent, then stop blaming them and start blaming the system.
Divide and rule works because we let it..

YABU. So you are envious of their pay even though they don't get many of the things you receive by being permanent including job security. Oh and you don't want to do it yourself because you don't want job insecurity. If they have it so good, either do it yourself or stop being so bloody jealous.

I reading the new rules this morning by chance. Anyone interested in them see

www.gov.uk/guidance/off-payroll-working-in-the-public-sector-scope-of-the-reform-and-preparing-for-6-april-2017 which includes some HMRC examples of who is not and who is affected by the new rules.

and www.gov.uk/guidance/off-payroll-working-in-the-public-sector-scope-of-the-reform-and-preparing-for-6-april-2017

I am a sole trader (not limited company) in a different field and none of my clients are in the public sector so none of these rules appl,y to me but worth everyone knowing about. In addition to the very very recent changes above for those supplying the public sector last year the Government made it much less tax efficient to trade through a limited company as they changed the rules on tax and dividends. Lots of people gave up their companies as a result.

Trainspotting1984
I can the money now and pay 40% income tax on it, or I can leave it in the company and take it out gradually and pay 0 or minimum income tax on it.
The company pays the same amount of corporation tax both ways.