Brexit, IR35 and Coronavirus How to Prepare for 2021

Brexit, IR35 and Coronavirus: How to Prepare for 2021

 

2020 was a challenging year for agencies and contractors alike, and not just because of the coronavirus pandemic. Brexit and the upcoming IR35 changes have added to the sense of uncertainty that business owners faced throughout the past year, which has continued into 2021.

However, whilst it may appear we’re facing the perfect storm as we move further into 2021 in this blog, we will look into how you can overcome that uncertainty in the contractor market to ensure your business’s success this year.

Coronavirus

As businesses attempt to recover from the financial devastation of the last year, or are making plans to do so later this year, and we hopefully see restrictions eased and the national lockdown come to end, employing contractors rather than permanent hires could be the perfect solution for many businesses.

By hiring contractors, businesses can fill any gaps in their resources and knowledge and bring new skills into the mix. This may also allow them to revitalize any projects that may have been paused in 2020 due to a lack of staff or resources.

In the meantime, there any many support packages available from the government that businesses can apply for in the hope this will keep them afloat through the latest lockdown. The latest grant, a one-off payment of up to £9,000 is specifically for those in the retail, leisure and hospitality sectors. The Coronavirus Job Retention scheme, otherwise known as the furlough scheme, has also been extended until April and the 100% business rates relief measure is in place until the end of March. More information on the support available can be found here.

Brexit

As of 23:00 GMT on 31st December 2020, the UK completed its formal separation from the EU single market and customs union. The UK Government has since secured an approved trade deal, which sets out the framework for how the UK and EU will live, work, and trade together.

The full details of how the new trade deal will impact the contractor workforce is still to be disclosed. However, we know that it will impact the ability to move freely within the EU and the impact of the new rules, tariffs and regulations will hinder businesses ability to recruit EU nationals.

One of the impending changes that agencies and contractors should keep an eye on, is the changes that’ll affect right to work documentation. Employers will no longer be able to rely on an EU passport for example, as proof of an individual’s right to work within the UK. Rather, EU nationals who wish to stay living and working in the UK must apply for a new visa, to prove their Settled/Pre-Settled status. For any agencies who employ EU workers, to ensure compliance, your workers need to apply for this visa before the 30th June 2021 deadline to secure their right to continue living and working in the UK.

Contractors will still be able to work across numerous sectors throughout the EU, however, the nature of the Brexit regulations may dissuade businesses from doing so. On a more positive note, remote working has seen an influx in popularity due to the Coronavirus pandemic. And the flexibility that contractors can offer may see them relied upon more than ever as business shift to align themselves with the new rules and regulations.

More information on the trade deal and how the new regulations may affect your business can be found here.

IR35

As of April 2021, the responsibility for determining workers’ employment status will fall with the client (i.e. agency) rather than the worker themselves. This legislation change applies to all large, medium or private sector companies and agencies, and is called ‘off-payroll working’.

Agencies will be responsible for determining the employment status of their workers and whether they fall inside or outside of IR35, for example, if you are registered as self-employed but are found to be working as an employee, the end client will be responsible for paying any additional tax due.

It possible to work ‘outside’ the scope of IR35 if you are a limited company contractor genuinely working on your own, i.e., using a contract to provide services, not “employed” by a client.

Whilst the IR35 reform has caused a lot of concern, realistically the IR35 regulations shouldn’t result in businesses pushing contractors away. On the contrary, regulations simply encourage business owners to ensure all working relationships with contractors are compliant by defining the status of the contractor against HMRC’s criteria for tax purposes.

How Can We Help?

We understand that as we enter 2021, Brexit, the continuing Coronavirus pandemic and the upcoming IR35 reforms all have the potential to cause uncertainty and with so many changes it can be overwhelming. Here at Azure Global, we are here to put your mind at rest.

Our team are ready and happy to help you through the ideal options for your business and put a plan in place for your business payroll Solution needs.

Contact our friendly, knowledgeable staff today to discuss what we can do for you.