The IR35 private sector reform (off-payroll in the private sector) was set to come into effect on 6th April 2020. However, due to the coronavirus pandemic, the government has decided to put the legislation changes on hold for 12 months – meaning it will now come into effect on 6th April 2021.
On Tuesday 17th March 2020, the UK government announced in parliament that the impending changes to off-payroll in the private sector (IR35) would be delayed for 12 months. This means the legislation will now come into effect on 6th April 2021.
In the House of Lords, The Chief Secretary to the Treasury, Steve Barclay, said: “This is a deferral in response to the ongoing spread of COVID-19 to help businesses and individuals”.
He also added: “This is a deferral, not a cancellation and the government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company pay broadly the same tax as those employed directly.”
It is important to remember that if you are a contractor and your assignment has been deemed inside IR35; you are still better off contracting through an umbrella company rather than a limited company. However, if you are outside IR35 and entitled to make your own assessment, you may be able to benefit from contracting through a limited company.
Ciaran Woodcock, Head of Field Sales and Marketing at Churchill Knight, said: “It’s good to see the government put the needs to business and contractors first – as such a trying time for the country. With the unprecedented coronavirus pandemic around the world, anything to support businesses and the temporary workforce is welcomed.”
Churchill Knight can provide support to the UK’s temporary workforce
Over the last 12 months, Churchill Knight has spoken to thousands of contractors who have contacted us seeking an umbrella payroll service. A majority of these workers had been advised by their private sector client that their upcoming assignment would be inside IR35 and as a consequence, using an umbrella company was the best option for their payroll.
The delay to off-payroll in the private sector does not change the fact that if you are contracting inside IR35, you are better off using an umbrella company. However, if your client is now happy for you to make your own IR35 assessment in the build-up to April 2021, you may be able to benefit from contracting through a limited company (personal service company) – providing your assignment is correctly assessed as outside IR35.
If you are interested in finding out whether you can switch from an umbrella company to a limited company, we recommend you contact your recruitment agency. If you are not working through an agency, please contact your private sector client.
Should you be advised that you can determine your own IR35 status for the next year, we have always recommended our clients’ engage with a professional IR35 tax-status specialist when determining the status of their assignments. Whilst we are not tax-status specialists ourselves, Churchill Knight is partnered with a leading UK IR35 expert – Larsen Howie. As a result, all of our clients are entitled to heavily discounted IR35 assessments for each contract they take.
We specialise in both limited company accountancy and umbrella payroll
With over 20 years’ experience in the contractor accountancy and payroll industry, Churchill Knight has helped thousands of contractors get paid – in full compliance with HMRC rules and regulations. We are both an expert contractor accountancy and PAYE umbrella company, and our new FCSA accreditation is the perfect way for us to showcase our commitment to compliance within our sector.
Switching between our limited company service and umbrella is amazingly straightforward and cost-effective. We understand that your IR35 status may vary from assignment to assignment, and as a result, we’ll take care of the administration.