Results of the public sector consultation is up

[BoredBloke]

Ok,
I'm just about to start a PS CL1 contract, so on balance, I think it likely to be inside IR35 anyway, regardless of changes in April next year. I am likely to look for another PS contract afterwards (domain knowledge).

I'm clear that inside IR35 means no travel to temporary work address and that you receive a 'deemed salary' and pay employer and employee NICs and PAYE.

I think you can claim 5% expenses before the deemed salary calculation is done, up to the changes in April. I think you can still claim something for capital allowances e.g. purchase of a computer for work - also before the deemed salary calculation.

It seems pointless to get into the FRS (my company is not VAT registered yet). I don't want to do anything about pensions as I have adequate provision from previous permanent roles.

I'm not clear about renting a room to the business, spouse small salary for administration before the deemed salary calculation.

I think the balance may be changing in favour of an umbrella company after April?

No the 5% tax free part was removed also for PS contractors found to be inside IR35

[mudskipper]

No the 5% tax free part was removed also for PS contractors found to be inside IR35

After April '17. It is still available now.

But to OP, yes, if you're happy that you're IR35 'caught', then a brolly could be a hassle free option - and is out of scope for the rules in April, so (maybe!) still good for the 5%?

[eek]

After April '17. It is still available now.

But to OP, yes, if you're happy that you're IR35 'caught', then a brolly could be a hassle free option - and is out of scope for the rules in April, so (maybe!) still good for the 5%?

What 5%? The brolly will deduct their fee (say £25-40 a week) from your total gross income and pay you the rest via PAYE....

[northernladuk]

I think the balance may be changing in favour of an umbrella company after April?

It would be worth having a chat with Lucy at Contractor Umbrella. She posts on here regularly and is on top of the whole legislation so she can give you some very clear guidance to help with your decisions. At least you'll be clear with your options when the time comes to it.

PAYE Umbrella Companies for UK Contractors | Contractor Umbrella Company

[mudskipper]

What 5%? The brolly will deduct their fee (say £25-40 a week) from your total gross income and pay you the rest via PAYE....

You could well be right - I thought the 5% allowance applied with brollies, but I haven't looked into it.
You would be able to apply pension deductions in the normal way though - that could be a biggie.

[eek]

You could well be right - I thought the 5% allowance applied with brollies, but I haven't looked into it.
You would be able to apply pension deductions in the normal way though - that could be a biggie.

That is the biggie given that were you to use a limited company the payment into your limited company would be after employers NI had been deducted and I suspect that's not reclaimable.

So the best deal for a PS job after April will be (in this order):-

1. Force yourself onto payroll if you can (via Agency Worker Regulations).
2. Use the agency's own payroll.
3. Use an umbrella you pick yourself from the the list on Ask an Umbrella Company - All Umbrella Companies Are Equal or the other list of eligible members.
4. Use a limited company (but be prepared to have money deducted you will not be able to recover)...

And you probably need to do 2 or 3 for a bit before getting 1.

[lucyclarityumbrella]

You could well be right - I thought the 5% allowance applied with brollies, but I haven't looked into it.

Working through a brolly, COULD (and I use that term loosely as nothing is guaranteed!) mean that if you are not under Supervision, Direction and Control by the end client that the travel and subsistence can still be claimed for tax relief purposes at the end of the financial year. The 5% and Intermediaries Legislation is only relevant to Ltd companies, not brollies.
To date there is no specific test (like the one expected for IR35) for the SDC, however, we have advised our contractors to take their assignment spec to HMRC to get them to confirm if they are under SDC or not. This April will see the first chance for brolly contractors to try and claim the expenses via self-assessment - so we shall see.
Anyway on a positive note, if you are not under SDC, then you could claim the tax relief on allowable expenses, not just limited to 5%.

[eek]

Working through a brolly, COULD (and I use that term loosely as nothing is guaranteed!) mean that if you are not under Supervision, Direction and Control by the end client that the travel and subsistence can still be claimed for tax relief purposes at the end of the financial year. The 5% and Intermediaries Legislation is only relevant to Ltd companies, not brollies.
To date there is no specific test (like the one expected for IR35) for the SDC, however, we have advised our contractors to take their assignment spec to HMRC to get them to confirm if they are under SDC or not. This April will see the first chance for brolly contractors to try and claim the expenses via self-assessment - so we shall see.
Anyway on a positive note, if you are not under SDC, then you could claim the tax relief on allowable expenses, not just limited to 5%.

If you look at the contingent labour guidance see http://ccs-agreements.cabinetoffice....%20Generic.pdf it explicitly states that the contractor is under supervision and direction. It doesn't however make any reference to control which may or may not be the get out clause...

[BoredBloke]

If you look at the contingent labour guidance see http://ccs-agreements.cabinetoffice....%20Generic.pdf it explicitly states that the contractor is under supervision and direction. It doesn't however make any reference to control which may or may not be the get out clause...

But wasn't the wording relating to SDC supervision or direction or control?

[lucyclarityumbrella]

But wasn't the wording relating to SDC supervision or direction or control?

I think they covered all basis by saying and/or the right thereof