Anyone contracting for public sector and affected by IR35 changes coming?

[IHeartHoumous]

Have only recently started freelancing for public sector (had one invoice paid) and next one will be due post-6 April, had a brief conversation with Finance who said its looking like nearly all PS contractors will be deemed inside IR35 and suggested joining an umbrella company like Pulse. I will likely have to increase my day rate to offset that cost (Pulse is £60/month) and the fact that payments will be net of tax, I can no longer claim travel and subsistence expenses etc.

Is anyone else doing this? A Press Association piece a while back said contractors may increase their fees by 23% on average.

Thanks.

[MissFoodie]

I run as ltd co and my accountant has advised me that it's best to steer clear of umbrella companies ergo avoid contracting in public sector....

Not what you want to hear I know...

Alternatively take a fixed term contract?

[Hoppinggreen]

DH is an IT conrtractor, so are lots of his mates
They simply won't work in the PS and as the market is pretty buoyant at the moment they do have that choice.
IF any of them had no other option (unlikely) they wouid want a minimum of 25% over the going rate but the general feeling is to just avoid it completely.
We both work as Contractors within a ltd company for different clients so we shouldn't ever come under IR35 but PS can't allow for this.

[amberdillyduck]

We both work as Contractors within a ltd company for different clients so we shouldn't ever come under IR35 but PS can't allow for this.

That isn't a test. It isn't about how many client but how you work for them.

I had a full 2 year IR35 investigation cost about £1million of public funds I estimate. No-one was found to be within IR35

[Hoppinggreen]

Yes I know amber, that alone doesn't make us totally safe but combined with other things we do we believe we do.
One of my clients is a large firm of accountants and they are happy with it

[GrumpyOldBag]

I'm affected by this too OP and started a thread a few weeks ago which you should be able to find.

I am charging my PS client 35% more than my others because they are having to pay me through the payroll. This is on my accountant's advice.

They seem happy to do this.

[MissFoodie]

Hoppinggreen could I ask you please if you/your husband use agencies or job boards? Or find new contracts through contacts/network?

I've just finished a contract and really struggling with recruiters atm... tried a couple of sites but they seem to loop you back to job boards which are full of roles with agencies, not directly with companies?thank you!

[IHeartHoumous]

Hi again everyone, apparently IR35 changes won’t affect sole traders doing freelance work for PS clients, only Ltd companies? Anyone know if this is true?

[GrumpyOldBag]

Not sure, but my PS client just rowed back on needing me to go through IR 35.

But i'm a limited company.

[Halsall]

Iirc, sole traders already pay tax and NICs at the normal rate, i.e. the same rate as if they were employed - so there would be no change for them under the new conditions post-April 6th.

Ltd companies operate differently and a contractor working through a PSC has up to now paid tax at a lower rate - and completely within the law, btw. But HMRC don't like this at all, and want to level the playing-field. Hence the move to make the public sector 'test' each contractor to determine their status as either self-employed or employed. If they judge them to be 'employed' they will be forced to put them on the payroll.

The test is online and anyone can do it to see what their status is, but because it's a very blunt instrument and applies to every single profession across the board with absolutely no regard for the subtleties of the actual job, lots of us self-employed people in the public sector are getting an unhelpful 'your status cannot be determined' result.

This puts us in a quandary because companies are likely to put us on the payroll anyway in fear of falling foul of HMRC - and then just leaving it up to us to clarify our own status with HMRC. There are going to be an awful lot of very worried and angry people out there on Thursday

Grumpy if you've been told you can continue to be treated as self-employed, this implies that they've done the test on your behalf and it's come out in your favour - which is great news for you.