EXPERT SERVICES

FOR THE RECRUITMENT INDUSTRY

The New IR35 Is Here!
Are You ready?

Hang on, what’s happening? I think I missed it!

In a change that’s had more build up and anticipation than Y2K, the new IR35 has finally landed! Yes, employers (aka end clients) are now fully in charge of determining whether a contractor is inside or outside IR35.

Are you ready for it?

For those of you who’ve been living under a rock, or who don’t spend their free time reading the latest legislative changes in the HR and recruitment sector (which is basically a fun Saturday night for us) …

This month sees a shift in the HMRC rules for off payroll working. The move is to help prevent what HMRC call “disguised employment”.

Put simply, a loophole was leading to some contractors paying less tax. So HMRC have shifted the responsibility of determining payroll status from the contractor to the end client (hirer or employer).

This means that hirer’s must now:

  • Work out the IR35 status of all their contractors
  • Give contractors the reason behind their decision
  • Arrange to pay tax and NI contributions where appropriate

 

There will of course be steep consequences for non-compliance. And in a world where people and resources are already stretched to their very limit, we understand that this change is enough to make even the calmest amongst us panic.

That sounds like hard work, I want out

Sorry, the only exception to the new rules are your end clients who are classed as small businesses. But to qualify, they must meet two of the following three criteria for two financial years in a row:

  • No more than 50 employees
  • Annual turnover of less than £10.2 million
  • Balance sheet total of less than £5.1 million


Other than that, all employers are in for a World. Of. Pain.

But don’t get too excited, as this small business exemption does not apply to recruitment agencies.

You’re scaring me now

Ok, we’re being slightly theatrical for effect. But given the fever pitch that has surrounded the new IR35 we wanted to jump on the drama wagon, just for a moment.

Because actually, we’re rather chill about the whole thing. And so should you be.

It really doesn’t need to be complicated. We at JMK have several options that can prevent you and your staff being impacted by the changes to IR35, so that you can largely continue as before.

Phew! OK, that sounds good

Don’t worry, we’re here to take the pressure off. Talk to us today about how we can help you.

But before you can relax and chill with an appropriately summery mocktail, you do need to be aware of your responsibilities under the new rules and take steps to ensure that you’re covered. That’s what we’re here for.

With JMK in your corner, IR35 doesn’t have to be tricky.

What Are My Options?

Agencies have a few options when it comes to payroll:

  • In-house
  • Outsourced
  • Umbrella

Should We Keep Payroll In-House?

On the surface, keeping payroll in-house might look like a good idea. It’s always better to do things yourself, right?

Wrong.

Keeping payroll in house often comes at a high financial cost as well as having a huge impact on staff time.

To start, companies must absorb the financial hit of purchasing and implementing payroll software.

In addition, staff must be trained to use the software correctly so they can realise the benefits from it.

In the case of the impending IR35 changes, agencies need to decide whether their resources and systems will be able to cope with the increase in workload, and the complex decision making they will be tasked with.

What Are the Benefits of Outsourced Payroll?

Outsourcing payroll is a great option for agencies who want to save time, improve their standards, and reduce costs.

You can leave your payroll in the hands of experts, which leaves you and your staff free to focus on your company’s primary activity. This ensures that you are maximising your profits in every area.

There is also the increased accuracy and access to additional services and benefits that come with using a payroll service.

Outsourcing processes is usually a wise investment when compliance is involved, as it provides an added layer of protection against potentially costly mistakes. And that is certainly the case with IR35, where non-compliance might result in severe penalties.

Benefits of Payroll Outsourcing:

  • Timesaving
  • Access to payroll compliance experts
  • Increased accuracy
  • Access to services and benefits usually associated with payroll departments who have bigger budgets.

Taking the Umbrella Option

Using umbrella services is a great option for IR35 caught contractors; they will be taxed as an employee and there is minimal paperwork.

In addition, contractors working through umbrella companies have full employment rights and benefits, giving the contractor peace of mind and continuity of employment.

What are the benefits of umbrella to contractors?

  • Full employment rights, including holiday pay, pensions, and parental pay.
  • The stability and benefits of being employed while still having freedom and flexibility to move between contracts.
  • Continuity of employment history (helpful for mortgages and loans)
  • Earning consolidation

What’s Best for Me and My Contractors?

We at JMK understand the overwhelm that the IR35 changes are bringing to our clients.

Therefore, we urge you to make your payroll decisions now so that you have a smooth transition before the deadline.

HOW JMK CAN HELP YOU

We provide both payroll outsourcing and umbrella services and can advise on the right option for you.

Our exclusive comparator tool can help you choose the best payroll option for your agency and your contractors. It takes less than 10 minutes!

Our PSC Flex Service is designed for IR35-caught contractors with their own PSC who want to continue to work on contracts of their choice. PSC Flex allows contractors to process outside IR35 HMRC payments through their own company, while we take care of any PAYE payroll which is deemed inside IR35.

Remember – you can start your contractors transition now, and they will retain limited company status right up until the deadline. It’s free!

Talk to us to get the process started and relax knowing that you and your contractors are completely prepared for the deadline in April.

Stay safe and stay compliant!
The Team At JMK

Since 2002, JMK have been compliantly consolidating back-office, accountancy and payroll functions. 

We have evolved to provide a range of expert services; such as Professional Employer Organisation (PEO), or Back Office Support (BOS) or Funding, becoming a leading provider to the contracting industry.

We know every agency is different in some shape or form, even if only by a little, but important bit. Combining our knowledge and experience of multiple sectors enables JMK to support you all from recruiters and payroll, through to finance, compliance and management.

With JMK as your trusted partner, even the smallest team can process the largest payroll, regardless of payroll type.

Have a look at the wide range of services our Professional Employer Organisation (PEO) or Back Office Support (BOS) can provide to you and your business, it is far more than just payroll and finance.

Arrange a call back

INDUSTRY UPDATES