Supporting your PSC with IR35 Switch
Continue working ‘outside’ IR35 through your PSC with IR35 Switch
Under the upcoming IR35 reforms, you may find your ‘outside’ IR35 assignment becomes ‘inside’. If this is the case, but you don’t want to switch to permanent or Umbrella employment, JSA now offers IR35 Switch, so you can maintain your PSC and work through JSA’s Umbrella depending on your assignment’s SDS.
Until next year, you’re responsible for determining whether you’re operating ‘inside’ or ‘outside’ IR35 and you’re liable for any incorrect status assessments or unpaid tax. However, in April 2021, when the IR35 (off-payroll) reforms in the private sector come into force, (non-small) end hirers must issue contractors with a Status Determination Statement, detailing whether the assignment is ‘inside’ or ‘outside’ IR35. As the end hirer is now responsible for your SDS, you may find the status of your role changes from ‘outside’ to ‘inside’.
If your status does change, you will need to reconsider your working options. We can help you to review your contract and assignment terms and make any amends that could keep you ‘outside’ IR35 compliantly, or you may need to switch to Umbrella or PEO (outsourced employment). Alternatively, you can operate through our new IR35 Switch solution, switching between ‘inside’ and ‘outside’, Umbrella and PSC, depending on your assignment’s status.
IR35 Switch: How it works
With IR35 Switch, when you’re faced with an ‘inside’ contract that can’t be amended, you can ‘rest’ your PSC, pausing your operations while you work through our Umbrella company. We’ll continue to manage your PSC accounts in the background, submitting your payroll (RTI) and VAT returns if necessary.
When you’re working on an ‘inside’ contract and being paid through JSA’s Umbrella, you’ll receive your payslip from our Umbrella company instead of your PSC, and the necessary tax deductions will be automatically taken from your pay (Employment tax and National Insurance).
We can provide you with tailored illustrations of how your payment for a specific contract will be calculated under the Umbrella model.
Instead of paying yourself salary and dividends through your PSC, our Umbrella company will receive your income from the employment agency and pay you with all of the necessary tax deductions. This payment will be made directly to you personally, not your limited company, which is a separate legal entity.
Once your ‘inside’ contract ends, you can simply contact us and switch back to working through your PSC on an ‘outside’ contract. Your company will receive the income from your agency as usual and you can pay yourself a mixture of salary and dividends. Or, if you’re ever working on ‘inside’ and ‘outside’ contracts simultaneously, we can help you manage your payroll through both PSC and Umbrella, providing your contracts indicate it’s appropriate. Being paid both directly and through your company will mean that we should discuss again your choices around how you draw money from your PSC – which might change. So do ensure you discuss this with us once ‘switching’ begins.
There is no limit to the number of times you can switch between PSC and Umbrella with JSA, so you can enjoy the flexibility of contracting, maximise your take-home pay through ‘outside’ contracts, and avoid turning down assignments due to their role assessment.