Working inside IR35 – what are your options?

Working inside IR35 – what are your options?

By Published On: 17 November 2020

The April 2021 IR35 reform is just around the corner, and you may be wondering what might happen if you’re found inside IR35, and the impact it could have on your take home pay.

Whilst your expert Aardvark accountant is on hand to answer any questions you may have, it’s good to have a general understanding of the facts and what your options are. In this blog we explore just that.

Option 1: Work through an Umbrella company

If you’re found inside IR35, working through an Umbrella company for the duration of the contract could be your best option. You’ll effectively become an employee of the Umbrella, who will deal with ensuring you’re paying the correct tax, National Insurance Contributions, and PAYE. They’ll also deduct their monthly management cost. What you then receive at the end of the month is your total net pay. They’ll also deal with invoicing the end-hirer / client on your behalf, so you won’t have to deal with them at all.

So whilst working through an Umbrella means you won’t be entitled to the same tax benefits as you are when Limited, which will ultimately mean you’ll be taking home less pay (on average 20-30% less), you’ll still be able to contract confidently, knowing that everything has been taken care of on your behalf. Plus, as you’re now classed as an ‘employee’ you’ll be entitled to benefits such as sickness, holiday, maternity and paternity pay.

How can Aardvark Accounting help?

Every Aardvark package comes with the ability to switch between our Umbrella company and our Limited Company services. This means that should your contract require, we can seamlessly move you over to our Umbrella services for the duration of your contract, then switch you back when the time comes or you take on a new contract. This service comes at no extra cost, and your Aardvark accountant will be able to provide you with further information.

Option 2: Continue to contract through your Limited Company

If you’re found inside IR35 it doesn’t mean you have to start using an Umbrella company. You’re still allowed to contract through your Limited Company, should you wish to. And whilst you’ll end up taking home less than if you were to be found outside IR35, there are still some positives to contracting through your company. Your Client Director will be able to advise on your situation.

How can Aardvark Accounting help?

Everyone’s personal circumstances are different, so we strongly advise speaking directly to your Aardvark personal accountant, for a solution that’s tailored to your personal circumstances.

Option 3: Return to permanent employment

If you’re already considering retirement or returning back to permanent employment, then April 2021 might be the right time to do so. Maybe the conditions and potential financial risk surrounding contracting now outweigh the benefits, and you’re more secure in a permanent role.

Our team of experts here at Aardvark anticipate the April 2021 changes to only cause a temporary disruption, and would suggest thinking carefully before making a big decision.

How can Aardvark Accounting help?

Whether you’ve made your mind up or you just need to chat through your options, your expert Aardvark accountant is here to help you decide what’s best for you. If you decide that permanent employment is your best option, they can help place your company into a dormant state, (advisable if you think you’ll go back into contracting in the next two years), or help to close your company down completely. We can help advise on how to get the most money from your company, and help with wealth planning should you wish to invest.

Option 4: Challenge your end-hirer / client’s decision

Many end-hirers / clients could place a blanket inside IR35 status on contractors come April 2021, as the final status decision will now lie with them, along with the associated tax risks and financial penalties should they get your status incorrect.

If you feel your status has been unfairly or incorrectly determined, you are able to challenge your client’s decision by issuing a ‘client-led disagreement’. Please take a look at our blog How to challenge a client’s IR35 determination for more information on this process.

How can Aardvark Accounting help?

Your Aardvark accountant is here to help you appeal any IR35 decision you feel that has been incorrectly determined. Simply get in touch to discuss your contract and working practices, and they will support you and advise you on the steps to take.

Your Aardvark Accountant is here for you, no matter what

IR35 can be tricky, and with HMRC changing the legislation goal posts it’s never been more important to have a specialist contractor accountant you can rely on. No matter what the IR35 question, big or small, please do get in touch with your accountant to talk through your options. Whether it’s a simple question or you feel like you need your hand holding, we’re here for you.

Simply get in touch and let us take away any IR35 confusion, and leave you with nothing but clarity.

Note: All the information and advice in this blog post was correct at the time of writing.

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