It’s safe to say that 2020 is shaping up to be an unusual year in many ways and it’s no different for contractors. As an Intouch Accountant with several years’ experience looking after contractors, I understand that being flexible and responsive to change are key attributes for success. With the reform to the IR35 legislation coming into effect in the next tax year, it’s yet another change for us to adapt to, but I’m confident that together we can ensure it’s done right this time.
New IR35 rules to be introduced in April 2021
While I know there are a lot of issues facing contractors that seem more pressing in 2020 than IR35, it’s important not to overlook the changing situation and 2021 is approaching quickly. As a contractor or prospective contractor, you will want to focus on the unique challenges of your role under the new normal of a world of work dictated by coronavirus precautions. Worrying about the finer points of IR35 may not be at the top of your list of concerns.
It would be nice if all contractors found themselves on one side of IR35 or the other, but in reality, life isn’t always that simple. As a Personal Accountant I can tell you that switching between your Limited Company and Umbrella status could work well for you.
But why is Limited Company/Umbrella flexibility so important?
Having the ability to work flexibly in 2021 will be important due to the lack of control you have over your IR35 status under the reformed rules set by HMRC. Instead of deciding your own IR35 status going forward, the onus will be on the end hirer meaning you could find yourself needing a solution that supports both inside and outside IR35 determinations. However, working via both PSC & UMB can bring increased costs and complications when completing your self-assessment tax return (SATR) at the end of the financial year, causing you more admin headaches and tax confusion.
My experience leads me to believe this is the most straightforward way to manage your business as a contractor under IR35 changes. I’ve worked within the shifting framework of IR35 long enough to know that finding yourself inside IR35 can be tricky, but there are ways to make it work for everyone.
Make IR35 work for you
We have the perfect solution to help you navigate the new IR35 landscape. Our Flex service allows you to switch between Limited and Umbrella working as and when you need depending on your IR35 status. What’s more, we are offering this service as part of our Core package, meaning there is no doubling up on fees when you need to use the Umbrella solution through our sister company, Brookson. As we work very closely with Brookson, this means your self-assessment tax return (SATR) is more joined up for you at the end of the year.
For more information on how Flex can help you navigate the changes, click here.