IR35 Private Sector Reform
The IR35 private sector reform is already proving a challenge for contractors. So to help, we’re working with industry experts Workr who are equipped to explain IR35, protect your interests and maximise your income.
As a recap, IR35 was reformed both in the public and private sectors. It was initially designed to prevent tax avoidance and applies if a freelancer provides their service through their own limited company or personal service company.
The reform has meant that the responsibility of determining a contractor's status is now on the end client or ‘Engager’. Your agency will be the second to review your employment status. If either deem you inside, the fee payer (either the end client or agency) will be responsible for deducting PAYE tax and NICs from your earnings.
Sound complicated? Don’t worry, because we’ve asked our new partners to answer your burning questions below.
I'm working in a private setting; can I still use my limited company?
Unlike other sectors, within the health and social care sectors, you can’t use a limited company as you have to report to higher bodies within the organisation you are contracting to.
I've seen Umbrellas that offer 85% take-home pay. Why can't I just use one of those?
No reason, but you should be very cautious with these kinds of promotions. A compliant umbrella solution will not afford the opportunity for a net take-home pay of 85%. Even in a compliant setting, the Limited Company option struggles to achieve such levels of net take-home pay.
Naturally, the concern is that these kinds of ‘marketed solutions’ will be non-compliant and structured in such a way that puts a whole load of risk under the CFA, MSC Legislation and/or T & S Legislation for the whole supply chain. Potentially costing you more than a portion of your salary...
How can I tell which umbrellas are compliant and which aren't?
Look for those that have accreditation, such as the FCSA or Professional Passport – this evidences the organisation's compliance and that they have completed an audit for Tax and Employment purposes.
Avoid those that promote their solution based on ‘take-home pay’. These organisations often offer little in the way of member benefits and are very likely to be non-compliant.
Protect your interests today
If you’d be interested in seeing how Workr can support you, get in touch on the form below and a member of their team will call you back. Alternatively, please refer to the FCSA Memeber's Directory for all accredited umbrella organisations.