As the April deadline for rolling out new IR35 rules in the private sector draws closer, an increasing number of contractors have already received their status determination statement, with more expected in due course.
We offer a suite of IR35 compliant payroll solutions ranging from Pay As You Earn (PAYE) via Morson to several FCSA-accredited Umbrella companies.
If you are currently operating via a personal service company (PSC), it is important that you understand your options and the various routes available that ensure you remain compliant with the new rules.
Don't leave it to the eleventh hour - be proactive and avoid the rush by discussing your IR35 options today.
Cutting out the jargon: A simple guide to IR35
What is IR35?
Yes. From April 2021 the legislation will be revised. The key change to be aware of is that the responsibility for determining whether an individual contractor is operating inside or outside of IR35, will move to the end-client the individual works for rather than being left to the individual themselves to decide their own tax status as per the current version of the legislation.
Clients will need to make an IR35 determination on your role before the start of April 2021 and will need to inform both you and Morson directly of their determination outcome. This determination, presented in the form of a status determination statement (SDS) will either confirm you are Inside IR35 or Outside IR35.
This means the client has determined that the role you carry out is deemed to be similar to that of an employee of their business for tax purposes only and needs to be treated as such. If the client determines you are inside (or in the scope of) IR35, you will need to consider alternative contract payment options if you want to continue working for that client beyond 6th April 2021. This will mean looking into one of the below payment models via Morson.
This means the client has determined that the role you carry out is truly self-employed for tax purposes. If the client determines you are outside (or out of scope) of IR35 you can carry on operating through your LTD company and can continue to manage your own tax affairs in the most efficient way. You will still need a new contract to confirm the clients outside IR35 determination from April 6th 2021 but nothing else will change.
Morson Group Umbrella Company PSL
Whilst some umbrellas may claim to be HMRC audited this isn’t a badge of approval from HMRC, as HMRC will not endorse any company. We only engage with FCSA or Professional Passport accredited umbrella providers, this ensures they are financially stable as well as compliant with all relevant legislation. However, there are a lot of schemes designed to avoid Income Tax and National Insurance contributions (NICs), through a combination of capital advances and complex offshore joint (or mutual) share ownership arrangements. These schemes may also offer tax-free T&S, which again is subject to the intermediaries legislation in respect to SDC, and generally put the worker at personal financial liability. Part of our due diligence includes assessing some of the symptoms of aggressive scheme promoters such as:
Directors with a history of phoenixing companies Directors with hundreds of small companies under them Companies registered offshore e.g. Philippines, India, and the Isle of Man Payslips for an agency using different PAYE references 'FREE' schemes – i.e. no margin charged to the worker, high take-home pays promised
Our list of approved umbrella suppliers below can help you gather comparative quotes or please visit https://www.tax.service.gov.uk/estimate-paye-take-home-pay
Act now to gain the peace of mind that comes with knowing your IR35 affairs are in order.