Q. This week I have been bombarded with emails and letters from the various agencies that I work with. Although I am Director of a limited company which works within the Public and Private sector I offer Teaching and Tuition services. The company employs an accountant who does a brilliant job in sorting out all of the Tax and NI responsibilities. I receive no holiday or sickness entitlement or pension benefits, but I am happier and less stressed than my full time employed colleagues. I have been told by the agencies that I am inside the IR35 ruling and I have no choice but to join their payroll.
A. The new IR35 rules apply only to contracts where services are supplied within the public sector. Ultimately the rules shift the responsibility for determining employment status from the contractor to the public sector body themselves and the public sector body is required to inform the agency of their decision concerning IR35 status. It might be worth speaking to the agency to find out why your status has been determined as falling inside of IR35. You can continue to operate your limited company under the new rules, but where a contractor is deemed to be operating inside of IR35, within the public sector, the ‘fee payer’ (usually an agency) is required to deduct the relevant tax at source. With regard to the services you undertake within the private sector this will be unaffected by the rules and the responsibility for determining IR35 status will remain with you.
Change your agency. There are good ones around that do their work properly. See my posting on Linkedin over this issue.
Get out of the public sector and into the private sector, where these short sighted rules don’t “currently” apply.
The more contractors that leave the public sector the more chance there is of these new IR35 Public Sector rules being dumped and not making into the Private Sector. Maybe this is just wishful thinking!
Had an interesting response to a possible “contract” role in a public sector body yesterday after informing them that the rate was too low for working inside IR35, “what would you want to do it” Well I sent my reply as if it was a FT job so would depend on the T&Cs ie what Holiday, TOIL Expenses would be offered and obviously I don’t want to take a pay cut so it would need to match what I draw down now. Figure is irrelevant other than obviously it will blow their pay-scales all to hell, which is a bit unfair on the public sector employees, Anyone having success with this option?
I have been in discussions with my agency regarding an increase in pay to compensate the new deductions. I upped my day rate by 20% and was told that, ‘we do not currently have anyone working on that rate. If you can find anyone who will pay that, then by all means go there. But give us some notice.’
Well with no contract and having to pay PAYE twice, effectively taking a big pay cut it seems the best option. School’s are in a recruitment crisis as it is and the new ruling has just made this a whole lot worse. Ultimately the cost will be passed down and the government’s supply bill will increase. So what will they gain and who will ultimately lose out?