@Neil
It not really that simple though, because the way that we are being forced to work is to go through an umbrella - we wont be able to keep our limited companies open so that avenue isnt open to us.
You say "Put some money aside for hols etc" but thats what we do, My holiday and sick pay buffer sits in the company account until its needed.
Let me illustrate with a quick (very simplified breakdown)
Assume that someone is on £350 a day outside IR35, for simplicity I'm leaving off VAT and Expenses
Outside IR35
Billed amount (Gross) : £7000
Corporation Tax : £1400
Wage (PAYE) : £1000 [1]
Dividend : £2000
Gross Take Home : £3000
Net Take Home[2] : £2800
Leaving £2600 in the company to cover pension payments, sick pay, holiday pay, Accountancy fees, insurance, and putting some aside for the potential (inevitable) downtime looking for new contracts which can be several months at a time especially at the moment.
Inside IR35
Company doesn't exist so no billed amount and CT
Net Take Home [3] : £3740
So by your logic a contractor should take the £940 a month difference and use this to cover their pension payments AND put some aside for time off for being sick/holidays and for periods of being out of contract?
Its just not going to stretch that far, once you've taken a pension payment out it its pretty much gone, so where does the holiday/sick pay come from? Where's the contingency for the end of the contract where we might not work for 4-6 (or more) weeks?
I get that from a permanent employees point of view the headline £350 a day, £7k a month seems excessive and the personal tax % may seem low, but lets remember that rate to your employer doesn't change under IR35 - they will be paying the same amount for the contract resource (Maybe more because there will be an umbrella company in there taking their cut), all that's really happening is that contractors will be treated like employees for Tax but not for Benefits and based on the numbers in this article, the tax take to the treasury goes down because more contractors move into permeant positions and don't pay as much ££ tax [4].
The proposed IR35 changes only make the government more money if most contractors suck it up and remain contracting inside IR35, but we know this isn't going to happen, a significant amount will go perm or retire, a good number will find roles still outside IR35 (As has happened in the public sector where event HMRC are advertising for outside IR35 roles). So where is the benefit?
[1] In real life it would be a little less than this, but the annual personal allowance / 12 is easier to work with.
[2] This is a rough estimate based on the current dividend tax rate, not 100% accurate but not a million miles off.
[3] Pulled out of an online contractor calculator that didn't give a tax breakdown.
[4] Based on a role paying £45k which is about average for a permanent developer where I live (based on limited data gleaned from recruiters emails and LinkedIn jobs) my Annual PAYE would be around £6500 a year with NI of around £4000 (Total £10,500). But as a contractor my CT this year was £12k and paid around £2500 in personal tax too, at the same time I supported a local accountancy business and an insurance firm.