ContractorUK

The Cabinet Office has set aside £38.5 million for IR35, after HMRC found the department had not taken reasonable care. Contractors generally aren’t liable for this bill. It may still sway clients into seeking less outside work. Outside IR35 in the core department has fallen from around 91% of new engagements to around 3% in only six years. Ryan Dawson, IR35 Project Manager at Kingsbridge, writes exclusively for ContractorUK. contractoruk.com/news/cabine…

IR35 untouched. The lifetime limit for closing a company is cut in half. £1 million down to £500,000, from April 2027. The chancellor says no change for 3 in 4 claimants. A contractor with £750,000 of qualifying gains, who has not used the relief before, could pay another £15,000. In 2020 the limit fell from £10 million to £1 million, and that set off a rush of MVLs. One adviser expects directors with the most to lose to close before next April. One called the cut absolutely horrendous. Another said the exit door just got narrower. Six advisers regretted that IR35 was left untouched. One of them: “IR35? Untouched. Again!” Read the full coverage, exclusively on ContractorUK. contractoruk.com/news/autumn…

Frozen thresholds. The £100,000 trap. IR35, dividend tax and umbrella company rules. That is what contractors are raising before John Healey stands up for his first Budget today. ContractorUK is following along live, with what each announcement means for contractors. contractoruk.com/autumn-budg…

England’s over-40s could pay another 1p of tax to help fund a national care service. Sir Steve Webb’s plan would cost about £31 a month. It would raise £3.5bn a year, and contractors are included. There is an opt-out. Enrolment, however, may be the default. What it would do to dividends is not spelled out. Healey’s first Budget is Wednesday. Daniel Mepham, managing director of SG Accounting, writes for ContractorUK. contractoruk.com/news/social…

The Churchill Knight hearing is off. It was a wider test of the MSC rules John Healey helped bring in in 2007. On Wednesday he delivers his first Budget. He reportedly told an adviser, in private, that they would be “very narrowly applied and only in very specific circumstances.” Contractors in the cases are already sharing what they make of the hearing and the letters. Tyra Ali, a former HMRC official and consultancy manager at Markel Tax, gives her thoughts exclusively to ContractorUK. contractoruk.com/news/church…

More than £1,000 for a single umbrella introduction. As Ashley Olliver leaves the UK umbrella industry, he sits down exclusively with ContractorUK for a tell-all interview. He has seen rogue umbrellas advertise that fee. A compliant margin would struggle to support it. The off-payroll rules, JSL and the Employment Rights Act are driving a shift toward fewer, larger umbrellas. Smaller, well-run firms risk being squeezed out. Umbrella regulation alone will not drive out the cowboys, he says. He departs Parasol on 30 October 2026, after 18 years in the umbrella market, for People 2.0 in the US. contractoruk.com/news/paraso…

The right of substitution is about to get a lot less important. The employment status consultation could damage IR35 defences previously reliant on the importance of this clause. The spur is IWGB v Deliveroo at the Supreme Court in November 2023. This categorisation of all under the same blanket leaves much open for discussion. Andy Chamberlain, head of strategic policy at the Freelancer & Contractor Services Association (FCSA), writes exclusively for ContractorUK on the impact of this potential wide-scale generalisation. Contractors can respond. It closes at 11:55pm on Friday 8 January 2027. contractoruk.com/news/weaken…

Officials leave inside IR35 contractors outside. The new employment status consultation is meant to protect people the law treats as self-employed when they are not. It is 47 pages. It does not mention IR35 once. If you are inside, you already pay like an employee. You still have none of the rights. Public sector off-payroll started on 6 April 2017. Rebecca Seeley Harris, who worked with the Treasury on the 2015 employment status review, calls that omission glaring. Officials say the consultation is about rights, not tax. They are not proposing to reform IR35. Contractors can respond. It closes at 11:55pm on Friday 8 January 2027. contractoruk.com/news/employ…

In July a contractor facing a loan demand was handed a partner’s number at a law firm, and reported being told he “knew the W28 guy.” Companies House, however, records an overlap, and an even bigger question. What relationships, if any, exist between solicitors offering assistance to contractors and the businesses pursuing their debts? Asked whether the firm had dealings with West 28th Street, the partner said: “I can’t answer that question.” Firgas Esack has the record. We have asked the firm to explain it. The full story by Firgas Esack, exclusively for ContractorUK contractoruk.com/news/w28-co…

Workers’ rights, not tax, look set to reshape UK contracting under Labour. Jonathan Reynolds told the Labour conference the government will end ‘bogus self-employment’. Philip Ross sets out seven policy moves to watch. A conversation with chancellor John Healey at the conference reinforced his view. One of those moves could tie employment taxes to employment rights for people already inside IR35. If you are inside IR35, do you have the rights, or only the tax? contractoruk.com/news/labour…

Will you still get paid on Friday if your umbrella company is sold? That is the question contractors ask first. The announcement rarely answers it. If the buyer takes the shares, your employer is the same company. Payday, margin and your contract continue unless they tell you, in writing, that they are changing. A move to a different umbrella is another matter. That is a new employer. Holiday pay and any unpaid wages do not transfer on a reassuring email. Shelley Ankers-Wainwright has been in these deal rooms. She sets out 10 questions to ask. If yours has already changed hands, did the cheque still come in on time? contractoruk.com/news/umbrel…

The First-tier Tribunal has upheld HMRC’s refusal of a £569,175 VAT claim by ITS Plant-Tech, a wind-tech company. ITS Payroll invoiced for wages, employer National Insurance and a 1.5% fee, and charged VAT on the whole amount. ITS Plant-Tech paid the workers’ net itself. There was no written contract moving the staff. HMRC allowed the VAT on the fee. It refused the VAT on the wages and National Insurance. Read the full story by Carolyn Walsh on ContractorUK. contractoruk.com/news/its-pl…

Sean paid £1,994.30 in 2021 to settle contractor loans of £121,300. He is now being chased for £131,006.45. Felicitas recorded that payment as a complete discharge and irrevocably released him. The loans were then sold to West 28th Street. A source estimates that his account represented about £10 of that portfolio. West 28th Street has not written the debt off, and is pursuing it in full. If you paid to settle one of these and a new letter turned up, what happened when you sent them the settlement? contractoruk.com/news/contra…

Contractors are being told they can no longer use umbrella companies they have trusted for years. Lucy Smith, founder of Clarity Umbrella has found Joint and Several Liability squeezing compliant smaller umbrellas off agency preferred supplier lists, while agencies lean towards larger firms with bigger balance sheets. HMRC’s impact note said other impacts had been considered and none had been identified. She counts exactly 10 HMRC winding-up petitions against umbrella companies, filed between 26 August and 2 October. Has your agency made you switch umbrella since 6 April? What reason did they give? contractoruk.com/news/jsl-sm…

Robert Walters has a Budget ask that is not about tax. Clearance still sits between one approved project and the next. The contractor waits. The client waits. The other offer gets accepted. That is what Jason King, a senior technology manager at Robert Walters, wants Healey to fix on 28 October: an existing clearance that can move, where it is viable. He also wants funding for AI skills, and more. How long did your last clearance take, and did the contract survive the wait? contractoruk.com/news/budget…

2% levy on earnings above £75,000: one accountant is bracing for it, and hopes he is wrong. Sumit Agarwal of DNS Accountants sees that levy, in Healey's 28 October Budget, sitting between the higher rate at £50,270 and the additional rate at £125,140. He would not be surprised if contractors already pushed into umbrellas packed up and left as a result. Dan Mepham of SG Accounting does not expect a dramatic IR35 announcement or a rewrite of the rules, a month after he and other advisers asked Healey for an off-payroll reset. Michael McCullion of Bright Ideas says tweaks, including around Status Determination Statements, are more likely than that reset. Would a 2% levy above £75,000 be enough to make you look at working abroad? contractoruk.com/news/autumn…

An alleged £52,700 in NICs and interest. Court action threatened unless a standstill is signed by 23 October. In April 2022, HMRC billed hundreds of contractor companies that used Churchill Knight and Boox. It had decided those companies were themselves the MSCs. Debt transfer is the separate step. It can reach a company's directors. One contractor company that did not appeal has already been issued with transfer notices. HMRC did not issue one to that company's director. Tyra Ali, former HMRC compliance specialist, of Markel Tax, on who HMRC can come to. contractoruk.com/news/can-hm…

IT contractor demand just hit a 40-month high, the REC’s highest reading since April 2023. August scored 52.7, a second month of growth. VIQU’s Matt Collingwood calls the market encouraging. A recovery, he says, is too early to call. First Point’s David Taylor says clients feel more stable and are releasing held-back projects. However, if guaranteed hours goes ahead in January 2027, he warns, a full-time offer after 12 weeks could pause contract hiring. contractoruk.com/news/it-con…

The Foreign Office went from 211 contractors outside IR35 to 62. Nearly 90% inside. £14.8m is set aside. The bill is still open. Reasonable care is required in an IR35 status determination. A blanket "inside IR35" determination is not that. Charlie Hemsworth of Bauer & Cottrell writes for ContractorUK on the five steps to take before your client does the same contractoruk.com/public_sect…

Luke knew it was a loan. They told him the scheme was robust, put together with tax counsel, and promised nothing else would change. January 2014. They were moving. The email said the only change to his contract would be the business address. He accepted the new one. The loan clause was gone. A separate Loan Agreement was "to follow," they said. Had they sold the debt on? If nothing else was changing, what did the separate Loan Agreement say? contractoruk.com/news/contra…