We have had a number of questions recently asking why some roles on the Arras People job board are posted with different day rates.
The simple answer is that the changes implemented by the UK Government in April 2017 regarding off-payroll workers in the Public sector means that we have to do this.
To re-cap, under the latest legislation it is now the responsibility of the Public sector hiring organisation to assess each role they are looking to fill as being either IN or OUT with regards to the legislation.
Where a role is identified as OUT of the legislation, a contractor can continue to use their PSC (Personal Services Company) as a vehicle to deliver their services. In turn they collect all monies due and their limited company is responsible for paying any taxes that are due on the revenues collected.
On the other hand, those roles that are declared as IN with regards to the legislation have a different treatment under the tax laws. They require that whoever pays the worker must make appropriate deductions for Employers National Insurance, Employees National Insurance and PAYE from the revenue that is collected.
As such we advertise such roles with a statement such as this:
**The client has stated that these roles are “IN” the new off pay-role worker legislation – Maximum day rates: £375 Umbrella / £330 for PSC – Deemed PAYE **
We can pay the full rate on offer to a worker who operates through an umbrella company as they take on the liability and become responsible for making all relevant deductions before paying the worker.
However, in the case of a PSC Worker who wishes to continue working through their Limited company we have to calculate a lower rate which takes into account and covers the Employers National Insurance which will be due on the transaction.
The remainder will then be subject to Employee National Insurance and PAYE deductions with the balance being paid to the workers Limited company. This is under a “deemed employee” situation as we are liable for deducting all taxes from the money and paying this to HMRC.
At this time these rules only apply to those who are working in the Public Sector, though it is hard to imagine that the imbalance in the market it creates will be allowed to carry on for too long!