Virgin Media IR35 Decision – No More PSC Contractors – Blanket Ban

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Virgin Media IR35 Decision for Contractors is Blanket Ban
Virgin Media IR35 Decision for Contractors is Blanket Ban

Virgin Media IR35 Decision

The Virgin Media IR35 decision is now clear. They will no longer hire contractors who operate via personal services companies. All contractors in future at Virgin Media must be PAYE. They will have no more PSC contractors beyond March 23rd.

Contractor Questions on Virgin Media IR35 Decision

  1. What options are Virgin Media giving their contractors?
  2. What will the Virgin Media IR35 decision cost contractors if they go the umbrella company route?
  3. What will it cost contractors if they choose the agency PAYE route?
  4. What employment rights would the contractor get going the Agency PAYE route?
  5. Why was the Virgin Media I35 decision taken to blanket ban PSC contractors?
  6. Did the Government intend to destroy the flexible workforce when they made these changes?
  7. Why is the Virgin Media decision so painful for contractors?

What options are Virgin Media giving their contractors

Virgin Media will no longer hire any contractors using personal services companies. Those contractors already there will be given three options:-

  1. Join an umbrella company
  2. Go PAYE via their current recruitment agency
  3. Leave

According to our source, Virgin Media are known as being very good employers who look after their people. So, this has come as a bit of a shock to the contractors there.

What will the Virgin Media IR35 decision cost contractors if they go the umbrella company route

If the contractors take the umbrella company route the umbrella company will be paid the rate that the contractor was previously getting.

They will then deduct income tax and national insurance before paying the contractor. The umbrella company will charge the contractor a monthly fee. However, the contractor would no longer have to pay an accountant.

What will it cost contractors if they choose the agency PAYE route

If the contractor takes the agency PAYE route there will be certain deductions on the rate before tax and National Insurance will be deducted.

One agency is offering a choice of two options – a Premium Rate and Basic Rate.

For a contractor currently earning £440 a day the Premium Rate would be around £388. The Basic Rate would be around £346.

What employment rights would the contractor get going the Agency PAYE route

For both options the contractor will get full AWR rights such as:-

  1. statutory sick pay,
  2. maternity/paternity pay and
  3. pension

According to communication from the agency the difference is that “your premium rate is your rate before holiday pay is deducted, whilst your Basic rate is your rate after holiday pay has been deducted”.

The communication states that the contractor will be engaged with the agency on a ‘contract for service basis’.

Why was the Virgin Media I35 decision taken to blanket ban PSC contractors

It’s such a shame that Virgin Media has joined so many other top companies in the UK by blanket banning PSC contractors.

When ex-Chancellor Philip Hammond put this legislation in place initially he said that genuine contractors would have nothing to fear.

Yet, many contractors, who would test as outside IR35 if tested are being forced to either take contracts that are inside IR35 or leave. Surely that is something to fear.

They will be getting a 20% to 25% income cut when they still have to pay the same mortgage, car loan, other bills etc.

Did the Government intend to destroy the flexible workforce when they made these changes

When various Chancellors and Prime Ministers put this in place it was surely not expected that most of the UK’s top companies would abolish contracting altogether at their companies.

How often have Government ministers praised the flexible workforce and what it does for the UK economy. Yet, here they are destroying it at company after company.

Why is the Virgin Media decision so painful for contractors

The Virgin Media IR35 decision is just the latest in a long line of decisions to blanket ban PSC contractors. Many of those are genuine contractors who would pass any IR3 5test.

Surely, someone in Government must come to their senses soon and stop the blanket banning of personal services companies before lasting damage is done to all our top companies and the British economy.

Does the Government really want the UK economy to take a major hit just when the cost of Brexit hits home?

Time is very short.

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Comments

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1 COMMENT

  1. As someone contracting at Virgin Media all I have been made aware of is that they are ceasing PSC engagement beyond March, not other communication has been forthcoming at all.

    This article implies that there is a blanket umbrella / permie option but that is not the case. Many contractors do not appear to have been given an option of umbrella or permie at all and are thus seeking alternative opportunities.

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