Umbrella Companies for Supply Teachers
There are several umbrella companies for supply teachers.
Those umbrella companies charge the supply teachers for a payroll service.
Using an umbrella means that freelance substitute teachers can claim some expenses that they couldn’t do if they simply paid the IR35 tax.
If a supply teacher is outside IR35 they would usually use a limited company. If they are inside IR35 they would usually use an umbrella company.
So, how can they tell if they are inside IR35 or outside IR35?
IR35 Employment Status Test
They could try the online IR35 Employment Status Test that HMRC set up to show freelancers if they are inside IR35 or outside it.
There’s just one thing to remember here and this is not a definitive test for IR35.
This is only HMRC’s idea of who is inside IR35 or outside of it.
It is the law that governs your IR35 status and not HMRC’s test.
And they are more than a little biased.
However, if the test showed you to be outside it I think you can safely say you are outside it.
Main IR35 Factors
There are three main IR35 Factors and nine more minor ones.
The major ones are:-
- Supervision, Direction or Control
- The Right of Substitution
- Mutuality of Obligation.
As regards point 1, if you are told what to do, when to do it, where to do it and what equipment to use, this would point to you being inside IR35.
If you have in your contract that you can supply a substitute when you cannot make it, that would point to you being outside IR35.
If your contract states it is for a set period of time and your client must pay you for that period of time whether they are able to use you or not, that would mean that there was a Mutuality of Obligation to each other. This would point to you being inside IR35.
Government Changed IR35 Rules in the Public Sector
Of course, the Government has changed the rules in the public sector.
Supply teachers can no longer decide their own IR35 status.
Their department now decides it for them.
The department can make supply teachers take the IR35 test to work out their IR35 status.
If the supply teacher is outside IR35 they can continue to use a limited company.
If they are inside IR35 they would be better using umbrella companies for supply teachers rather than paying the IR35 tax.
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