What should you do if your contract is inside IR35?

If you are a contractor working on an assignment which is considered to be outside IR35 now, you may find this is no longer the case when the new IR35 rules come into force in April. This is no reason to panic, but it is important to weigh up your options.
If your end hirer or agency has not already been in touch to discuss your assignment’s IR35 status, then it’s important for you to seek clarification as soon as possible and then get in touch with us to review your options.
We have significant experience in IR35 and can provide tailored advice and support to help you navigate the impact of the IR35 reforms.

What do the IR35 reforms mean?

The reforms mean that responsibility for determining your IR35 status is switching from you to the end hirer (unless they are ‘small’ in which case the new rules do not apply).

Join an Umbrella company

Another option to consider is to join an Umbrella company. When working this way, you become an employee of the Umbrella and pay tax and National Insurance just like a regular employee.

You have to pay the Umbrella a fee for providing the service, but there are benefits in that you would have access to SSP, SMP, sick pay, paid holiday and a record of continuous employment. All compliant Umbrella companies adhere to the same tax rules, so there should be very little difference in the take-home pay offered by Umbrella companies.

Get help from Clever

We are part of JSA Services which operates one of the UK’s largest Umbrella companies. JSA has a strong reputation for customer service and compliance and today supports tens of thousands of contractors to enjoy the freedom and flexibility of contracting.

What happens to your PSC if you switch to Umbrella?

If you switch to Umbrella, you don’t necessarily have to close your PSC. In fact, it’s recommended you don’t close your limited company, just yet.

Dormant Status

Unless you have other income going into the limited company, then it’s likely there will not be much activity through the company. In this case, you could opt to make the company dormant. With a dormant company, you don’t have to submit full annual accounts to Companies House, though there are certain procedures that must be followed to notify HMRC that it is dormant. If this option is right for you, we will take care of all the admin.

Umbrella Solution for Contractors

Posted by Editorial