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Tax Arrangements for Off Payroll Public Sector Contractors

Following the review by HM Treasury into “Tax arrangements for public sector appointees”, we thought we would pre-empt companies that are now seeking assurances concerning the correct, fair and timely deductions and payments of Income Tax and National Insurance contributions for employees of Contractor Umbrella.

So what does the new legislation mean?

The review recognises that there are circumstances in which it may be appropriate for an employer to appoint a contract worker who will be paid ‘off payroll’ i.e. through a PSC or intermediary such as an umbrella company, but some individuals who are engaged in this way may not be paying the correct amount of tax and therefore depriving the Treasury of revenue.

It is essential that Public Sector employers are able to assure themselves that their long-term senior staff are meeting their tax obligations, so the Government is proposing to tighten the rules associated with employing people off payroll:

  • the most senior staff must be on the payroll, unless there are exceptional temporary circumstances.
  • departments will be able to seek formal assurance from contractors with off payroll arrangements lasting more than six months and costing over £220 per day that income tax and national insurance obligations are being met. Departments should consider terminating the contract if that assurance is not provided.
  • this will be monitored carefully with financial sanctions for departments that do not comply.

Extract taken from the HM Treasury website; please click here to read the full article.

It is also important to note that IR35 has been clarified further by HMRC with a series of Business Entity Tests From next year contractors working through a PSC will have to declare their IR35 status on their self-assessment tax return, if they declare that they are outside, which is financially beneficial, they will be required to prove it to HMR&C. Before the new guidance, IR35 investigations were random to a certain degree but now those declaring that they are outside IR35 will be targeted and the burden of proof is on the individual and not on HMR&C.

So what is ContractorUmbrella doing to ensure our employees are compliant?

In short all Contractor Umbrella employees are already covered, so there are no changes to contracts, no new terms of employment and no additional worries raised because of this legislation.

Umbrella Companies provide payroll solutions for individuals who would otherwise be required to form their own private limited company, the solution Contractor Umbrella provides guarantees the statutory deductions for National Insurance and Income Tax and, as an employer, we also make the required payments for Employer’s National Insurance. These deductions are made via the standard PAYE system.

Our policies and procedures, as well as our business practices, have all been extensively and successfully reviewed by HM Revenue & Customs and Saffreys Champness. Furthermore, we are subject to an annual independent audit, the most recent performed by Kingston Smith. Recent “inspections” show us to be fully compliant with all current tax and employment legislation.

If your contract requires proof of compliance with this legislation then please download our “Statement of Compliance” as an assurance that all statutory payments and deductions are our responsibility, and that they have been made in accordance with current HM Treasury guidelines.


Why Choose ContractorUmbrella?

ContractorUmbrella is the hassle-free, straight talking umbrella company that provides umbrella employment for UK based contractors and freelancers. Independently voted as the best umbrella company by the readers of Contractor UK.

As one of the most trusted umbrella companies in the UK, we guarantee our employees peace of mind, absolute compliance and complete security. We are one of the longest standing and most respected umbrella companies in the UK.

Benefits of working through ContractorUmbrella;

  • Fast and easy registration - be ready to work in 24 hours, simply register online and we’ll take care of the rest.
  • Calculate your take home pay - use our online calculator to find out how much you could be taking home through ContractorUmbrella.
  • Same day payments - we offer same day payments as standard, for no additional fee.
  • Our Commitment Charter- is our guarantee that you will be looked after at every step of the way.
  • Flexible Limited Company Accountancy - when you sign up to our sister company Dolan Accountancy, you can transfer to ContractorUmbrella when umbrella employment better suits or your assignment sits inside IR35.
  • Employee Benefits - at ContractorUmbrella there are many benefits available to you as our employee including our Employee Rewards Scheme, Group Pension Scheme, Foreign Currency Exchange, Contractor Accommodation, Contractor Mortgages and much more.
  • Personal Employee Liaison Officer - we believe in the personal touch, so you will have your very own dedicated Employee Liaison Officer during your employment with us. Read some of the glowing testimonials we've received about our lovely staff and the outstanding commitment they give to all our employees and clients.

If you’d like to find out more, call us on 01206 591 000 or request a call back by completing our online form.