Bank Contractors IR35 News – It’s Not All Gloom for UK Freelancers

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Bank Contractors IR35 News
Bank Contractors IR35 News

Bank Contractors IR35 News

There has been some bad bank contractors IR35 news in the past few weeks. A number of major UK banks have announced that they will operate a blanket ban on contractors using their Personal Service Companies to avoid paying IR35 tax. The banks cannot legally make blanket assessments of contractors as inside IR35.

So, what they are doing is putting a blanket ban on outside IR35 contracts. All bank contracts will be inside IR35. Therefore all contractors will have to pay PAYE. This is having the effect of driving contractors into 3rd party companies like umbrella companies

Questions on Bank Contractors IR35 News

  • Which banks are operating blanket bans on outside IR35 contractors?
  • What options are the banks offering contractors?
  • Why are the banks doing this to contractors?
  • Is there any good bank contractors IR35 news?
  • Are there banks who will continue to take contractors?

Which Banks are Operating Blanket Bans on Outside IR35 Contractors

So far the following banks have made announcements hat they will take on no more contractors who operate outside IR35 using their Personal Service Companies:-

  1. HSBC
  2. Barclays Bank
  3. Lloyds Bank
  4. Morgan Stanley
  5. Tesco Bank

Indeed, as far as I know, all the banks who have announced their decisions so far have said that they will operate a blanket ban on contractors operating outside IR35.

Financial company M&G have also announced this will take on no more outside IR35 contractors.

What Options are the Banks Offering Contractors

For the most part the banks are offering contractors the following options:-

  1. Leave
  2. Take a Permanent Job
  3. Operate via a 3rd party company like an umbrella company or Managed Service Provider

However, Tesco Bank are only offering two options – leave or pay PAYE.

Why Are the Banks Doing This to Contractors

The banks are doing this because of an IR35 rule change in the private sector. From April 2020 companies will now be responsible for determining a contractor’s IR35 status. Previously it was the contractor who determined his, or her, own IR35 status with financial risks if they get it wrong.

This risk is now transferred to the hiring company. And this has spooked the more timid banks. They could easily change their contracts with contractors and their agencies with the resultant changes in the contractors’ working practices to take them outside IR35.

See How Companies Can Help Contractors Stay Outside IR35

Instead they have meekly capitulated.

Is There Any Good Bank Contractors IR35 News

No good bank contractors IR35 news has been announced yet All those announcing so far have said that they will put a blanket ban on contractors operating outside IR35 at their banks. So, contractors are assuming that the banks who have not announced their IR35 plans will follow suit

This is very bad news for banking sector contractors and for all UK freelancers.

However, there is a chink of light. It’s a case of no news is good news. Those banks who will operate blanket bans will have to get the news out early. They need their contractors to make choices now. There is now less than 6 months to go and many banks give out 6 month contracts.

There may be a reason why the other banks have not announced their plans so far. That reason may be that they don’t need to if they are operating the same way as before. They already take on contractors outside IR35 via their personal service companies and contractors operating inside IR35 via their umbrella companies.

So, it is no change in this respect. The only change would be that they have to assess contractors individually.

Are There Banks Who Will Continue to Take On Contractors?

We know of banking and finance sector companies who will continue to take on contractors outside IR35. One major building society / bank are going to do this. They will announce it in the next few weeks and start assessing their contractors for IR35.

We know of another major bank who are renewing contractors beyond the April 20th date when the IR35 changes kick in. They are also hiring contractors with contracts beyond those dates.

They have made no announcement so far. Why would they need to if they are operating as before? Of course this does not preclude them from suddenly  terminating those contracts. However, the indications are good there.

I could name them but I’d rather not just now.

So, it is not all doom and gloom in the contractor banking sector. There may be some good bank contractors IR35 news soon

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