Following the adjustment to the IR35 legislation on the 3rd March 2021, it seems clear that HMRC are intent on implementing the changes as planned this time around. These final ‘tweaks’ to IR35 mean that any remaining grey areas are closed and any room for manoeuvre is removed.
In essence these final adjustments to the legislation mean that even if you have 5% or less shares in the PSC you are still caught in the net. It also covers the fact of anyone being ‘associated’ with the owners of the PSC so it covers spouses and relatives.
So what options do I have as a driver?
- Go PAYE through an agency. This is the quickest and simplest option and over time we would predict rates will increase as the demand for ‘temporary assignment drivers’ will continue. Companies utilise agency labour for a number of reasons but there are two main ones. Firstly, they have peaks and troughs in their business models and they do not want to carry fixed costs of labour all year. At the same time, large companies report results and profit per employee. Temporary labour does not count towards this and it is often an important metric for their Directors and Shareholders.
- Stay PSC Limited. You will still be able to work for small customers that are not captured by IR35 legislation. Unfortunately, temporary assignments for small companies account for less than 10% of the current market based on our estimates. They also tend to be more volatile as it is generally absence and holiday cover so there is not reliability or consistency of work. These companies also tend to run second hand and older vehicles. By default, if there is an excess supply of labour then rates will go down.
- Find a permanent driving role direct with the end customer. Undoubtedly there will be some roles available but these will be on a PAYE basis and will not offer the current flexibility that agency work offers. For the reasons outlined above in point 1, companies will not take their whole workforce on a permanent basis.
- Stop driving and do something different. In most cases this will mean PAYE employment as IR35 now applies to the whole of the private sector so all workers are caught by the rules.
- Go Umbrella or follow an Insurance backed scheme. We have not seen a scheme or Umbrella set up so far that we believe cannot be challenged by the new IR35 rules. Beware. They will simply declare themselves bankrupt if challenged, leaving the HMRC to come after you.
In summary, unfortunately the options are narrow and after many years, the Treasury and HMRC are slamming the door shut. All large companies employing temporary labour have no option but declare that IR35 applies which dictates how agencies engage those workers.
The market place will remain for temporary assignment workers and over time rates on PAYE will rise. We are here to support you continuing to earn a living and will fight for rates going forward. Please give us a call if you want to discuss any of the above.
We empathise and understand your frustration and annoyance but unfortunately there are only a few things certain in life. Death and taxes are two of them!