As talk about IR35 heading to the Private Sector picks up speed in the media, we’ll take a look at what this news could mean for our clients and contractors.
LLOYDS TO REFUSE TO HIRE CONTRACTORS UNLESS THEY ARE ON THE PAYROLL
|Lloyds Banking Group has told its contractors it will no longer engage them unless they move onto PAYE or work through umbrella companies.The Financial Times reports the banking giant has made the decision due to off-payroll working (IR35) rules being extended into the private sector from April next year.
Recruiter understands that should Lloyds have an ongoing requirement for a contractor with a specific capability, they will seek to offer the contractor a permanent role but for contractors working in positions where the requirement is deemed more medium term, they would be transitioned into a PAYE arrangement.
Read the original article here.
It’s interesting to see large, blue chip companies taking this kind of approach to address IR35.
For companies who engage external contractors, ensuring IR35 compliance will mean a careful balancing act – understanding that corporate decisions will need to be made that don’t deter the contractor workforce from continuing to work with your company.
PAYE and umbrella company payment models will incur additional costs for employer National Insurance contribution, pension and apprentice levy – will these costs be passed up line, or passed down to the contractor? Will companies expect the contractor to take a reduction in their net income to incur the cost of tax and employee National Insurance Contribution, or would their salary be increased to compensate?
Whatever approach businesses decide to take, it’s crucial that a comprehensive assessment is needed to understand the full impact that any changes will have on the contractor workforce.