Lloyds IR35 Contractor Decision
The long awaited Lloyds IR35 contractor decision has been announced to their contractors. Lloyds Bank will no longer hire any more contractors or freelancers. Moreover, they will fire their current contractors prior to next April. That will be the end of freelancers at the bank for good. Contractors will be considered off-payroll workers and cannot use their personal service companies. They can stay on if they use umbrella companies or take a permanent job.
Contractor Questions on Lloyds IR35 Contractor Decision
- Why will Lloyds Bank no longer use contractors?
- When will Lloyds Bank get rid of their contractors?
- Why Don’t Lloyds just make their contractors take the CEST IR35 test?
- How long do Lloyds contractors have to make up their minds?
- What effect will the Lloyds IR35 Contractor Decision have on the contractor market?
Why Will Lloyds Bank No Longer Use Contractors
This decision is a direct result of the new IR35 rules in the private sector which will come into effect in April 2020. However, many firms are taking action now before we get there.
Other banks that announced they will no longer take on contractors include Barclays Bank, HSBC and Morgan Stanley. Click on any of them to see why.
When Will Lloyds Bank Get Rid of Ther Contractors
Lloyds Bank will not extend any contracts for contractors using personal service companies beyond March 20th. Their managers will start explaining this to contractors from today (October 8th) in one on one meetings.
Their contractors are being given three options:-
- Leave the company at the end of their contracts
- Take a permanent job if their skills merit it
- Join an umbrella company
Lloyds want someone else to monitor compliance with the new IR35 rules. They do not want to risk having to pat the tax for lots of contractors if they happen to be inside IR35.
Why Don’t Lloyds Just Make Their Contractors take the CEST IR35 Test
Of course, Lloyds could have simply made their contractors take HMRC’s Check Employment Status for Tax online IR35 test. Those that pass it can be told that they can continue to use their personal service companies.
Those that fail could be told to find an umbrella company.
Indeed, HMRC say that if a contractor passes the CEST test then they won’t come after a company even if it is later found that the contractor is inside IR35.
That’s hardly likely as HMRC created the test and tax experts say it is heavily weighted in their favour.
However, if contractors pass the test that should put them in the clear.
HMRC do make one proviso though The questions must be answered correctly. Perhaps it is that which is scaring the timid, risk averse banks like Barclays, HSBC, Morgan Stanley and now LLoyds.
How Long Do Lloyds Contractors have to Make Up Their Minds?
Lloyds contractors only have till October 25th to make up their minds and tell the company which option they would prefer.
Those that choose the Permanent Employee option will move into the company between now and the end of February. That’s if the bank wants them.
Those deciding to move to umbrella companies will have to do so between the start of January and the end of February.
Those going for the Leave option will go at the end of their contracts and certainly before March 2020.
What Effect Will The Lloyds IR35 Contractor Decision Have on The Contractor Market
This is devastating news for contractors as one more bank comes out against hiring contractors.
The banks were always major hirers of contractors. Indeed, they usually paid premium rates for contractors compared to other sectors. These are, perhaps, the darkest days for the contracting profession. It will survive, of course, but at much lower levels. and rates will plummet too as the same number of contractors pursue fewer contracting jobs.
The Lloyds IR35 contractor decision just adds more to the misery felt by contractors throughout the land.
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