Contractors across the UK breathed a collective sigh of relief in March as the Government finally announced an IR35 delay. Despite seeming to go ahead with plans to extend the off-payroll rules to the public sector in the March Budget, the tricky lockdown situation has prompted something of a U-turn just a week later.
The delay is a welcome surprise for contractors, who have been in a state of limbo over the past few weeks. Read on to find out about the changes, the ongoing coronavirus pandemic and the affect both have had on the self-employed.
You would have been forgiven for overlooking the first case of coronavirus in the UK at the end of January. However, since then, the virus has spread rapidly throughout the country, with over 20,000 cases by the end of March. Given that over 1,000 people have now died from the virus in the UK, it’s no surprise that the country is in lockdown until at least mid-April.
Prime Minister Boris Johnson confirmed the new measures in his daily address to the nation on 23rd March, with lockdown beginning on 24th March. While it isn’t as strict as some other countries, everyone in the country has been advised to stay at home wherever possible.
That means one hour of outdoor exercise a day, no trips out unless it’s for food or medicine and staying two metres apart from people whenever you do leave the house. However, it’s also had a profound impact on how we work…
As part of their lockdown measures, the Government has instructed people to work from home wherever possible. If remote working isn’t an option, they have advised employers to close their premises unless they fall under any of the ‘key worker’ categories:
Employers have been reassured that they will be covered for 80% of employee wages during any shutdown, up to £2,500 a month. That means they don’t need to make anyone redundant. Instead workers can be furloughed and return to work when the situation changes. It’s up to employers whether they cover the remaining 20% of wages themselves.
The furlough scheme is great news for permanent employees as it means many of them will be able to self-isolate without a massive impact on their income. However, the system doesn’t cover the self-employed, who spent the first working week of lockdown asking what they were supposed to do over the coming weeks and months.
Should they continue working and put themselves and their families at risk of catching the virus? Or stop working and take a financial hit, applying for universal credit as their only source of income?
It seems the government got the message by Friday 27th March, announcing that self-employed would be covered by a financial aid package. HMRC would use the last three years of tax returns, or less where required, to work out the average income of self-employed workers and cover those costs for their time off work.
The only problem is that this financial aid won’t be paid out until June, meaning contractors could still face months of uncertainty and financial difficulties.
To make things worse, all of the above was happening just weeks before changes to the controversial IR35 legislation. The IR35 off-payroll rules aim to stop people working as a self-employed contractor when they were actually doing the work of an employee.
By setting up their own intermediary in the form of a limited company, these contractors were paying less tax than PAYE and sidestepping statutory rights for their employers. Employing a contractor, companies were not liable for paying employer’s national insurance or providing things like sick pay, holiday pay or a pension scheme.
The measures were introduced for the public sector in April 2017, which saw many contractors lose their jobs with companies concerned about compliance. This was due to be extended to the private sector in 2020, affecting thousands more contractors in an instant.
The UK budget on 11th March featured no mention of an IR35 delay, leaving contractors fearing for the worst. However, with the fast-moving lockdown situation, the Government has been forced into a U-turn, just a week later.
Steve Barclay, chief treasury secretary, announced that the tax reforms would be delayed by one year. Speaking in Parliament, he confirmed a new date of April 2021 for the changes, giving contractors and the businesses that work with them another 12 months to prepare.
The move is part of a package changes that aims to protect the economy from the ongoing coronavirus outbreak.
The coronavirus outbreak has highlighted some clear issues for contractors in the UK. As well as relying on an IR35 delay, contractors have found themselves stuck between a rock and a hard place when it comes to sick pay.
Umbrella companies can assist with both these issues. Working through an umbrella, you’re classed as an employee, meaning IR35 simply doesn’t apply to you. You’re taxed through PAYE, but you get a range of statutory benefits in return. That includes sick pay, so you don’t need to worry about time off work to protect yourself of your family.
Want to find out more? Visit Umbrella Supermarket. Our innovative umbrella company comparison site allows you to compare quotes from leading providers in a few clicks with no obligation whatsoever.
Any contractor considering switching to an umbrella company will want to know how to find the best provider to work with.
Although you could spend your precious time and energy searching the web for the best umbrella company, there is an easier way – using an umbrella calculator.
In this guide, Umbrella Supermarket explains why every contractor should use an umbrella calculator in 2021.
If you are considering contracting you will need to decide on PAYE or umbrella.
It can be a difficult decision to make and contractors will inevitably be questioning which option will be the best for them.
To help every contractor get on the right track for them, in this guide Umbrella Supermarket looks at PAYE vs umbrella, outlining the key differences and how this will impact you.
There are many reasons that contractors across the UK opt to work under an umbrella company.
Umbrella companies offer an easy way to contract and remove the need for the contractors to worry about the burdens of admin, finances, tax and IR35, all things that limited company contractors have to deal with.
For this reason, many contractors will be weighing up their options and questioning whether it is worth using an umbrella company in 2021. To help make the decision that little bit easier, Umbrella Supermarket has put together this guide on the pros and cons of using an umbrella company.
Any contractor that is considering operating through an umbrella company in 2021 will need to understand Umbrella Company fees - from why an umbrella company charges fees, how they are paid to how much the contractor will pay.
In this guide, Umbrella Supermarket answers those all-important questions to help every contractor know exactly where they stand when it comes to umbrella company fees.
If you’ve made the decision to contract through an umbrella company in 2021, you will next need to find an umbrella company that’s right for you.
After all, there are lots of umbrella companies out there, so how do you know which one to choose?
To help you find the best umbrella company for you, in this guide Umbrella Supermarket outlines what makes a good umbrella company, so you can rest assured you’re making the right move.
One of the many advantages to operating through an umbrella company for contractors is that they become an employee of their chosen provider.
In turn, this means that the contractor will be automatically enrolled onto the umbrella company’s workplace pension scheme.
To help contractors find out more about umbrella company pensions Umbrella Supermarket has put together this handy guide.
If you are considering contracting through an umbrella company you will naturally have questions and queries over how they work.
After all, making the move to umbrella can be a big step for contractors. To help, in this guide Umbrella Supermarket explains how to get started with an umbrella company and share our top tips for using one in 2021.
PAYE or umbrella is a question asked by every contractor. Which one you opt for will have a big impact on your contracting career and lifestyle. So, it's important to make the right decision for you.
To help makes things a little bit easier, Umbrella Supermarket has put together this guide on PAYE or umbrella, outlining the key differences between each, to help you make the best and most informed decision for you.
One of the many benefits to working through an umbrella company is that you will receive holiday pay as well as a range of other statutory benefits including sick pay, maternity and paternity pay.
To find out more about umbrella company holiday pay, and how to calculate how much you will be entitled to, Umbrella Supermarket has put together this handy guide.
Contractors must make several decisions throughout their contracting careers. One big decision contractors have to make is how they will operate.
One way that contractors can work is through an umbrella company.
Umbrella companies have become an increasingly popular way to contract in the past few years, offering many benefits to the contractor. But, how do you know whether this option is right for you?
To help every contractor make the right decision for them, in this guide, Umbrella Supermarket explains when not to use an umbrella company.
There are tons of benefits to using an umbrella company, which is why they have become such a popular option for contractors in recent years.
After all, an umbrella company takes away the stress and hassle of operating through a limited company whilst offering contractors a range of advantages, such as statutory rights, paying them a salary, deducting correct tax levels and National Insurance, and taking care of tasks like expense processing and invoicing.
However, as more and more contractors opt to use the services of an umbrella company, more providers have started to claim that they are HMRC approved.
To bust the myths around HMRC approved umbrella companies and get straight to the facts, in today's guide Umbrella Supermarket look at whether HMRC approved umbrella companies really exist, so you know exactly where you stand.
If you're considering making the leap to contracting, you will understandably want to know how much you will have to pay in umbrella company costs. After all, this amount comes directly out of the contractor’s pocket, so it’s important to be clued up on how much you should expect to pay.
To help contractors, in this guide Umbrella Supermarket answer the all-important question of how umbrella companies cost in 2021.
