The Executive team within Evergood have been working on a solution to minimise the impact of the new IR35 “Off Payroll” legislation coming into force on April 6, 2017. Please note if you currently work via an Umbrella Company you can disregard this information because you are exempt from this legislative change.
The new legislation changes the way temporary workers pay taxes when working within the public sector. If you currently work through your own personal service company (PSC) – more commonly known as your own Limited Company / Self Employed - these changes will almost certainly affect you or your company. Further information and guidance can be read using the following link:
What is changing?
The rules applied to the flexible workforce within the public sector will change regarding the payment of employment taxes. Those PSC workers not directly employed or on the payroll of the public sector body – for example agency staff – will now be assessed for IR35 purposes by the public body, and in turn by the organisation which pays them. It is expected that ALL PSCs will fall within the scope of IR35 from April 6, 2017, save the rare exceptional circumstances when the end client is a private sector organisation or the role the temporary worker is completing is deemed to be a service rather than a supply of staff.
Do not believe anecdotal advice!
Please rest assured that this change is not optional, but rather statutory. Despite any information your accountant or third party provides, there is no escaping this change. If you work via a PSC and engage with a public body you must expect to be captured by this change and account for your taxes in a similar way to employees.
Furthermore, if you are working for a private company this does not automatically exempt your PSC from the change if that private company is providing a service for an end user which is a public body – for example a local authority, NHS Trust, school or CCG. Nevertheless, please rest assured, if you are genuinely working for an end client which is Private, you will be able to retain your PSC.
And finally, if your Umbrella provider seems too good to be true; it probably is. Umbrella’s offering over 80% net take home returns will be leaving you liable for retrospective investigations, fines and interest on unpaid tax …. plus the unpaid tax.
What does this mean to those Evergoodians currently operating through PSCs?
In summary, the benefit of working through a PSC will in most circumstances disappear. Further, by retaining your PSC post April 6, 2017, that PSC remains liable for retrospective inspection regarding the incorrect application of IR35 pre 2017. For those Evergoodians who are Consultants or General Practitioners, who currently engage with us via a PSC, we will review your status individually on each assignment.
So, what are Evergood going to do for me?
Quite simply, everything you need us to do to ensure the transition is smooth and seamless. We will be communicating again on February 28 confirming our new payroll solution. Without exception, this will offer every Evergoodian – whatever their profession – the most efficient payroll service. This will ensure your take home pay remains maximised. Furthermore, the service will provide a FREE status check on your existing PSC to confirm whether or not there are any benefits for you in retaining your limited company status.
Evergood’s payroll solution will involve working with a local business which has over 40 years experience within recruitment payroll. Under the new regime, this company will become the business that pays you, and Evergood will remain the business that finds you work. In doing this, we get to focus on what we do best and you get paid in the most tax efficient way from professional specialists.
We do not expect this change to be the final chapter of the PSC story so far as temporary workers are concerned. We will seek to remain at the forefront of any innovations that come to light over the ensuing months, and provide that service back to our candidates. For now, we have 6 weeks with which to make our Evergoodians compliant for the new financial year, and thank you in advance for your co-operation in this matter.
What do I do next?
You do not have to do anything other than focus on caring for the citizens within your charge. We will communicate next steps to you by February 28, 2017, which will include a complete timeline for the changeover. What we can say is that actions speak louder than words – and to that end, we are delighted to confirm that Evergood will be running an extra payroll on April 5, 2017, to capture all hours completed upto that date under the existing regime. This will afford all PSC Evergoodians maximum benefit before the new law applies. Please note that any hours processed after April 6, 2017, whether they had been worked before or after this date, will have the new rules applied.
If you have any specific questions on the above, please direct them to your Evergood Recruitment Consultant who will manage the query accordingly, or email us at firstname.lastname@example.org.