Barclays IR35 Contractor News
Barclays IR35 contractor news is just breaking. They are telling their contractors that they will take no more contractors through intermediaries. Instead, contractors will only be engaged through agencies and Managed Service Providers, e.g. consultancies and umbrella companies on a PAYE basis.
Contractor Questions on Barclays IR35 Contractor News
- How much of their income will contractors lose if they work via an umbrella company?
- When will Barclays Stop Hiring Contractors?
- What does the Barclays IR35 email say?
- What effect will this have on the Contracting Profession?
- What options are open to banking sector contractors?
- What will most banking contractors do?
How Much of Their Income Will Contractors Lose If They Work Via an Umbrella Company
This will knock an instant 15% to 20% from a contractor’s take home pay. However, some umbrella companies can retain more of a contractor’s money than others.
When Will Barclays Stop Hiring Contractors
There will be no extensions or new contract hires from October 1st. That’s pretty short notice considering they just announced it on September 30th. They obviously deliberately left it to the last moment. That would give freelancers fewer options and less time to choose them.
Barclays were always a huge hirer of contractors going back many years. It was where I started my career, in Juxon House in Paternoster Square in London. There were frequent visits to the excellent grounds in Knutsford in Cheshire.
What a shame that Barclays bank have taken such a hard line stance to the IR35 Reforms. It looks like they are risk averse. The IR35 reforms don’t take place till April 2020. However, it looks as if Barclays have thrown the towel in early.
What Does the Barclays IR35 Email Say
Here is the Barclays Email.
Barclays IR35 Update
The Government is expected to change the way it applies the rules for off-payroll working from April 2020.
As a consequence, Barclays will no longer engage contingency workers who provide their services through a personal service company, limited company or any other intermediary.
Instead, Barclays will engage contingency workers on a PAYE basis only, for new, or renewed, contracts.
What Does This Mean for You
From October, Barclays will not extend contingent workers who provide services via a personal service company, limited company or any other intermediary beyond the end of February.
Where contingent workers continue to work beyond the end of February they can do so on a PAYE basis.
You will be contacted for further details on how the change will impact you moving forwards.
Should you have any queries please do not hesitate to contact us.
End
What Effect Will This Have on the Contracting Profession
This will have a devastating impact on the contractor profession as a whole and specifically the banking sector. The banking sector has always been a major user of contractors. Many companies say that their computer systems are their business. This is especially true of the major banks.
Already HSBC and Morgan Stanley have said that they will only take on contractors via Managed Service Companies and not through Intermediaries, i.e. their limited companies.
What Options Are Open for Banking Sector Contractors
Something has to give here. Banking sector contractors have a choice of leaving, taking a permanent job or operating via umbrella companies. Options 2 and 3 will mean a drastic reduction in income for contractors. Option 1 is not great either with several major banks deciding to do the same as Barclays.
It’s such a shame as many of the contractors Barclays are telling that they must operate on a PAYE basis are contractors who are well outside IR35. However, it looks as if the Government and HMRC have intimidated Barclays into declaring all their contracts will fall inside IR35 in the future.
This is a very sad day for both the banking industry and the contracting profession. There will b dancing in the offices of the big consultancies today.
What Will Most Banking Sector Contractors Do?
Probably the best option for contractors is to operate via an umbrella company in the meantime. Then they can try and get contracts with banks who decide to continue using limited company contractors.
When the IR35 reforms were implemented in the public sector this is what most contractors did. They bit the bullet. The only real option open to them was to get the best deal they could from an umbrella company.
One thing contractors should be careful of, though, is when agencies try to foist a particular umbrella company, or group of umbrella companies on them. This is usually because the agency is getting a bung for putting contractors into a particular umbrella company. That is illegal under the 2010 Bribery Act. See Paying Bribes – Do Umbrella Companies Bribe Agencies?
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Many private sector contractors are likely to be told by their client company either that they must operate as an off-payroll employee or join an umbrella company. It’s time to plan for that now.
They need to look at umbrellas ASAP.
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