Major changes in employment and tax legislation, known as IR35, come into force in April and are already having a significant impact on employers and the recruitment sector. Thanks to careful planning at 24-7 Staffing, we are well prepared.
April 6th sees the end of ‘disguised employment’, with changes to IR35 anti-tax avoidance regulations. It will become the responsibility of the end hirer (i.e. the employer) to determine whether a role should be categorised under ‘employment’ status and so the worker subject to PAYE.
In the case of the Driving sector, virtually all assignments will now be subject to PAYE status. We have recently received our letters from local SME's and national blue chip clients to confirm that they will only contract with recruiters who pay their candidates via PAYE (as we do, at 24-7 Staffing).
There is more information about IR35 here, but in summary, it relates to workers who provide their services through an intermediary. The intermediary will usually be the worker’s own personal service company (PSC) or a limited company. However, the relationship is more akin to employer/employee. Therefore, the worker is deemed to be ‘employed’ and should pay their tax and National Insurance on a PAYE basis.
At 24-7 Staffing, we championed the move to PAYE, and back in 2016 transferred all our temporary workers to PAYE status, across all the sectors we operate in, not just driving. This means when April arrives all our temporary workers will carry on as usual, and we can reassure this client and others that we are fully compliant with the new IR35 requirements.
The same will not be true of many of our competitors, who rely on supplying PSC or limited company workers. They will now face the risk of losing their temporary workers to competitors, having to pass on a sizeable price increase to recoup the cost of switching to PAYE or asking their candidates to take an average £2 per hour pay reduction….which clearly will not go down well.
The early signs for 2020 are that demand both for permanent and temporary staff is on the rise, putting further emphasis on an organisation’s and a recruiter’s need to retain and attract quality staff.
Whether you require additional permanent staff or ongoing supply of temporary staff or would like some advice or clarification around IR35, please do not hesitate to get in touch with one of our experienced team.