Everything you need to know about IR35
What’s all this about IR35 and PSC’s?
The government has brought in new legislation which aims to ensure members of supply who use their own Personal Services Companies (PSC’s) to be paid but work like employees
(inside IR35), pay taxes in a similar way to employees paid through PAYE. IR35 is legislation that defines whether a worker is genuinely self-employed or not.
FromApril 6th, the government has made schools responsible for interpreting this legislation for those that work through PSC’s. This will be very hard for schools to do but don’t worry, Aspire subject all workers to PAYE so this is not an issue if you use us for supply!
What is a PSC?
A personal service company (PSC) is typically an individual who is the owner and/or director of their company and they have no employees. When they work in a school instead of being paid through the payroll of either the school, the agency or the umbrella, they invoice for their work. Sometimes, referring to themselves as a consultant. Companies set up in this way may also include relatives and friends whom act as a second director or as the company secretary.
How could this affect schools?
Schools will need to identify any PSC’s that currently work within their supply chain. They need to make sure the Agency partners they work with ‘deduct tax (PAYE) and national Insurance (NIC’s) at source. If the agency can confirm it does, (as is the case with all Aspire People workers) the school has no liability. If the agency partner does not or cannot confirm this, the school bears ultimate responsibility for the liability for the unpaid tax (PAYE) and national insurance (NIC’s). As a result of this some schools have even been instructed to add a 13.8% cost for using the PSC to account for the liability.
What are the Agencies and Umbrella’s Obligations?
Agencies and Umbrella companies will now have to determine whether each PSC falls within the scope of the legislation. If they do, the School, Agency or Umbrella have a legal obligation to deduct tax and national insurance at some point before invoicing the PSC.
In a nutshell!
Aspire People do not supply staff on a self-employed/ PSC basis, we deduct all tax (PAYE) and National Insurance (NICs) at source. You will never have to worry as absolutely no liability will be passed onto your school and your charge rates will not be affected!
Have any questions about IR35? Speak to us today! firstname.lastname@example.org