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IR35 comes into effect from 6th April 2017 and may affect you and your take home pay. If you currently work in the public sector through an intermediary then your net pay will likely be affected.
IR35 legislation is set to change from 6th April 2017 to ensure that employees working through an intermediary, such as a Personal Service Company (a limited company worker), are taxed in the same way as PAYE employees. This means that if you are working in the public sector and your contract falls ‘inside IR35’ your agency will need to deduct all tax and NI on your behalf and pay these deductions to HMRC. The current stance of the NHS is that all medical professions will fall within IR35.
What should I do?
Firstly, if you are working via PAYE, umbrella or in the private sector there is no need for you to change anything. We are still able to pay into a PSC for private sector work. However, if you are working through a PSC in the NHS your take home pay will be affected.
You still have three options in terms of your engagement with McGinley Healthcare – PAYE, umbrella and PSC / Limited Company. However, should you choose to continue with your PSC engagement, your net pay will be reduced for any placements worked from 6th April 2017. This is beyond our control as we will be required by law to make tax and NI deductions before we pay you.
You may have been advised by other agencies that you should be paid via an umbrella company, however, do take real care when choosing the right one for you. With hundreds of umbrella companies to choose from, many are looking for ways to increase your take home pay but ultimately they must all work under the same legislations. It’s incredibly important that you ensure that your chosen umbrella company are meeting their regulatory and HMRC obligations or you may be held accountable for any underpayments.
To protect both our staff and our business, we have completed a thorough review of a number of umbrella companies. After our exhaustive process we have selected and fully vetted five umbrella companies that we believe will offer you the best service for your peace of mind. You must choose one of these five umbrella companies to engage with should this be your engagement type and your consultant can provide you with a full list of the selected companies along with their weekly charges. If you are considering this method of payment you should act now to ensure you are set up in good time for the changes.
Ultimately there will be relatively little difference in net pay between each of the three engagements, but you will each have your own reasons as to why one option is better for you. Your consultant will be speaking to you over the coming weeks about your current engagement type, whether you will be impacted from 6th April and whether you’d like to change your engagement with McGinley Healthcare as a result.
The legislation is due to be finalised on Monday 6th March and we will send out another communication following this to clarify any further changes. In the meantime if you have any questions please do not hesitate to contact your consultant on 0330 024 1345. Remember, agency work is still beneficial for you, in terms of the rate and the flexibility that it offers in both hours and locations.