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Are you a current or previous PAYE contractor paid directly via Owen Daniels Consultancy? Please login here to access your payslips and other documentation issued such as P45s and P60s.

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Knowledge Hub

  • Contractor ways of working
  • IR35 – the latest legislation
  • Accountancy providers
  • Umbrella partners
  • Insurance providers

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IR35 and Legislation changes

  • A key factor at the outset of accepting a contract is the IR35 assessment of the contract, operating inside of IR35 means you are required to broadly pay the same tax and NI contributions as an employee of the end-client. Outside IR35 means you can operate under different taxation if appropriate.
  • For further detail on IR35 and the latest legislation please visit our IR35 section in the Knowledge hub.

Personal Service Company

  • As a professional contractor, many choose to become a Director of a limited company – known as a Personal Service Company, which involves operating a business bank account, invoicing for your services, and undertaking all the compliance/accounting requirements of running a limited company. Many opt for this route for its tax-efficiency, but it may not be the most suitable or efficient way depending on the contract and IR35 assessment.

Umbrella

  • Umbrella companies offer a solution to contractors, taking care of your necessary tax and NI contributions through PAYE. As an alternative to running a Personal Service Company this removes the hassle of handling any paperwork/accounting requirements.
  • Operating via an umbrella offers continued employment rather than jumping between different agency payrolls –although you may have multiple contracts, you’ll only have one employer. There may also be opportunities to claim tax relief on work-related expenses, depending on your circumstances.
  • - It is important to use a compliant Umbrella business and we recommend making sure they are FCSA registered.

Agency Payroll

  • - Owen Daniels Consultancy, like many agencies, offers a PAYE payroll to all contractors, running a weekly pay-run and a time-efficient set up. The advantages include ease of set-up and typically no costs, however most agencies are unable to offer the continued employment element that Umbrella organisations do.

IR35

IR35, or the ‘off-payroll working rules’, is legislation set to make sure workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same tax and National Insurance contributions as employees if operating through an intermediary (typically a PSC – Personal Service Company).

A contractor’s assignment can be assessed ‘inside’ or ‘outside’ of IR35 to determine whether income tax and national insurance must be deducted (inside).

Pre April 2020

In the private sector prior to April 2020, the contractor’s PSC has been responsible for assessing the inside or outside status of IR35 and takes responsibility for the required tax deduction.

Post April 2020

From April 2020 in the private sector, the responsibility for determining the IR35 status will pass on the end-client (where the contractor services are provided). The responsibility for the tax deductions will also change to the party paying the Personal Service company – typically an employment agency.

This change is only applicable for medium or large businesses, and small businesses as defined in the Companies Act are exempt – assessed by meeting two or more of the following requirements;

  • Annual turnover is no more than £10.2 million
  • Balance sheet total not more than £5.1 million
  • No more than 50 employees

For small businesses the responsibility of assessment and payment of tax will remain with the Personal Service Company.

Pre April 2020

In the private sector prior to April 2020, the contractor’s PSC has been responsible for assessing the inside or outside status of IR35 and takes responsibility for the required tax deduction.

Clients – What action do you need to take?

  • Map how your contractors are being paid and through which intermediary methods
  • Determine/decide IR35 status of contractors effected by the April 2020 legislation
  • Issue an IR35 Status Determination Statement in writing for all Personal Service Companies – provided to the agency and contractor. You must take ‘reasonable care’ to arrive at this decision for it to be valid.

Contractors – What action do you need to take?

If you’re currently working via a personal service company with an assignment post April 2020, the end client must issue an Inside or Outside IR35 statement via a ‘Status Determination Statement’. This decision will impact how your tax will be deducted and there may be more appropriate payment models for your situation.

If you disagree with the determination you have the right to challenge this through A Client-Led disagreement process.

Depending on the determination you make be taxed differently and be subject to loss of allowances previously available.

Determining IR35 status – how?

The Government have issued guidance and an online tool ‘CEST’ – Check employment status for tax, to help determine if the off-payroll working rules apply.

https://www.gov.uk/guidance/understanding-off-payroll-working-ir35

These guidelines have come under criticism from various sources and improvements are continuously being made, however it is up to the end-client to determine the IR35 status and alternative methods can be used to make these decisions.

Accountancy providers – Umbrella and Ltd Company

Brookson One

Insurance providers

Kingsbridge