Barclays to transfer all contractors to PAYE to avoid IR35 issues 4 October 2019
One of the UK’s largest banks has confirmed that, due to upcoming reforms to off-payroll working rules, they will be employing all contractors on a PAYE basis, commencing early 2020.
Currently, the onus for establishing how a contractor should be taxed falls squarely on the contractor themselves but draft legislation (if enacted) means that this responsibility shifts to the end client / engager. Due to the intricacies surrounding how employee status is determined and the potential financial implications on income tax and National Insurance contributions (NICs) liability, Barclays have taken the decision to pay all future contractors under PAYE to simplify matters.
This also removes the necessity to individually assess each contractor which could be time consuming for a business the size of Barclays.
Computer Weekly reports that Barclays sent an email communication out to all individuals who will be affected, advising of their intentions. Speculation is rife that many contractors will move to provide their services to Barclays’ competitors or even make the decision to work abroad as a direct result of the revelations.
CIPP comment
Listen to this 25-minute webcast where Diana Bruce, CIPP Policy & Research, covers the key changes (including the new statutory requirement for a Status Determination Statement) that will be brought in by the draft legislation (when enacted) and looks at the practical application of the new rules for off-payroll working in the public, private and third sectors from April 2020.
Visit My CIPP on our website for other topical webcasts - an easy way to update your team on aspects of payroll legislation.
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Lloyds the latest bank to announce plans following IR35 reforms from April 2020
10 October 2019
The Financial Times have reported that Lloyds are the latest bank to announce their intentions regarding contractors that they currently employ in light of the upcoming reforms to IR35. This follows the dramatic news from Barclays last week in which they announced that all contractors would be transferred to PAYE early next year. The banking sector is heavily reliant on the use of contractors so it will be interesting to see how some of the other major banks will decide to proceed in order to ensure compliancy with the new legislation and how to deal with the potential administrative burden surrounding the new rules. Lloyds, who currently engage thousands of contractors, have admonished that those employed on a contractor basis will need to accept pay cuts of up to 30% or potentially risk losing their jobs. Some of those affected will be offered permanent roles but others will need to work via umbrella companies which have associated charges for contractors. The main amendment bought by the reforms will be in relation to where the responsibility lies for who decides if an employee is classed as being ‘inside IR35’ or not. The onus has shifted from the contractor themselves to the engager and means that there will be significant administrative work required from Lloyds, should they continue to employ contractors on the same basis as they currently do. They have clearly decided on proceeding in a manner which removes the need for this additional work to be carried out. There would also be higher financial costs to Lloyds as
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