With last week’s Supreme Court ruling that Uber drivers must be treated as workers rather than self-employed, and with IR35 reforms for the private sector rapidly approaching, exploring the true tax status of driving contractors is firmly in the spotlight.
For the driving and logistics sector, where a significant number of contracted drivers are included in the millions of people currently classed as self-employed in the UK, the tax rules for this group will be subject to change come April.
Still need help navigating it all? There is still time to explore your options, and we are here to help.
I’m a LTD company driver, how does this affect me?
If the client you’re working for is classed as a small business (less than 50 employees, less than 10.2 million turnover or balance sheet less than 5.1 million) then you can continue to be paid LTD, as the IR35 determination still applies to the Director of that company. However, for all other companies (likely to be the majority) you will likely be deemed inside of IR35 by the hirer and therefore classed as an employee.
So I’m found to be inside of IR35. What are my options?
Pay As You Earn – PAYE – either via your agency if they have the capability, or via an Umbrella company. Both will employ you and make the necessary tax and NI deductions, however, there are further benefits to using an Umbrella vs in house PAYE.
What is the difference – isn’t Umbrella ‘dodgy’?
Like all sectors, there are companies who do not operate compliantly. However, if you join an accredited Umbrella company like Clipper Contracting, you have absolutely nothing to worry about. By engaging with a compliant Umbrella company, you gain the flexibility of being a contractor with the reliability of having employed status – your Umbrella assume all employment liabilities such as SSP, SMP and SPP. By sticking with one Umbrella company through your contracting assignments, this will simplify your tax affairs and will make it easier to prove your income (for example, on a mortgage or loan application).
What benefits do I receive via Umbrella?
Clipper Drive – our tailored driving solutions – will offer comprehensive Drivers Negligence Insurance cover. It also allows for the opportunity for HGV drivers to claim overnight expenses for those staying away from home, up to £34.90 per night. You also typically receive a higher daily or hourly rate than what your agency will offer you in house PAYE – this is due to the agency no longer having to cover the costs of running an in-house payroll and so is able to pass this saving onto the contractor.
It sounds straightforward – what’s the catch?
None - no paperwork or annual accounts to complete, no tax returns to be filed, and no need to understand complex tax rules. You simply complete your timesheets as required, send to your agency as usual, and we’ll take care of the rest.
How can I tell if something’s not right?
Here are the things that you and your agency can look for to make sure you’re not at risk:
· Does the Umbrella have UK address? (an overseas address could be an indication of different tax arrangements)
· Are they a UK company with a company registration number?
· Does an example of your pay show tax and NIC deductions on all income
· If one part of your payment doesn’t appear on your payslip, it may indicate no tax and NIC contributions are being paid on that part of the income
· Take home 80-90% of your pay – if it’s too good to be true, it’s likely to be non-compliant!
· Statements such as ‘HMRC compliant’ or ‘QC approved’ – HMRC does not endorse any umbrella company
Why you should choose an FCSA accredited umbrella company
This group of Umbrella companies offer only legitimate solutions that are vetted through a rigorous audit process. Clipper Contracting Group has this accreditation, so you can rest assured that all your tax and NIC liabilities will be taken care of correctly, leaving you free to go about your work with peace of mind.
Call us to explore your options today - 01305233170
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