Mark Phillips No Comments

Barclays makes major lending push with £2.3bn deal for Kensington Mortgage Company

In a major push to broaden its lending offering, banking giant Barclays said this morning it has agreed a deal worth around £2.3bn to buy specialist lender Kensington Mortgage Company.

Barclays said the acquisition will allow it to offer more mortgage options to the self-employed and people who have multiple or variable incomes.

Get in touch with UK Contractor Mortgages today to discuss your Buy to Let & Residential Mortgage requirements.

The bank will also take ownership of a portfolio of mortgages offered by Kensington Mortgage Company, worth £1.2bn, in efforts to lend to a greater variety of customers.

The deal comes after the pandemic has led to an increase in the number of self-employed borrowers and those with complex incomes due to the impact of the Government’s furlough scheme and the wider effect on job volatility.

Get in touch with us today to speak with the UK’s Best Contractor Mortgage Broker.

The Maidenhead-based specialist lender has around 600 staff and offers buy-to-let residential mortgage options as well as owner-occupied lending.

The transaction is expected to complete towards the end of 2022 or early 2023.

Get in touch with us today to speak with a specialist Contractor Mortgage Advisor.

Matt Hammerstein, chief executive of Barclays, said: “The transaction reinforces our commitment to the UK residential mortgage market and presents an exciting opportunity to broaden our product range and capabilities.

“KMC is a best-in-class specialist mortgage lender with an established track record in the UK market, strong broker and customer relationships and data analytics capabilities.

“KMC complements our existing UK mortgage business and broker relationships through the addition of a specialist prime mortgage originator and the utilisation of our strong UK funding base,” Hammerstein concluded.

By Michiel Willems

Source: City A.M.

Mark Phillips No Comments

Just Mortgages launches marketing service for brokers

Just Mortgages has launched a white-labelled digital marketing package for self-employed brokers.

The service is aimed at brokers who want to promote their own trading style and brand.

Carl Parker, national director of the self-employed division of Just Mortgages, described the offering as a full-service marketing solution, with the group aiming to match the level of service provided by a dedicated marketing agency.

Get in touch with UK Contractor Mortgages today to discuss your Buy to Let & Residential Mortgage requirements.

Self-employed brokers will have access to in-house marketing professionals, who are also experts on the subject of mortgages, and will be offered branding and logo development, content creation and social media support.

An initial consultation between the broker and the marketing team is followed by a brand set up with logo and brand guidelines to establish the look and feel of the business, as well as website and social media content in line with financial promotion regulations.

Get in touch with us today to speak with the UK’s Best Contractor Mortgage Broker.

On-going support is then provided to the broker to help raise their business profile and attract new clients, according to Parker.

“Our aim is to provide the best possible showcase for the brokers’ business while they get on with the important job of helping clients with their mortgage and insurance needs,” he said.

Get in touch with us today to speak with a specialist Contractor Mortgage Advisor.

Figures from IBISworld show there are 5,580 mortgage broker businesses in the UK in 2022, an increase of 2.6 per cent from 2021.

Last week, Just Mortgages also announced a new training initiative for those wanting to become mortgage and protection advisers.

By Jane Matthews

Source: FT Adviser

Mark Phillips No Comments

High inflation boosted IT contractor jobs market in May 2022

High inflation appears to have boosted the less quickly growing IT contractor jobs market, as the slowdown in growth in temporary technology billings paused in May.

In Report on Jobs, the REC suggests that rising costs made employers scrutinising the bottom line turn to temps rather than add members of staff to the payroll on a full-time basis.

REC chief executive Neil Carberry gave this assessment in the report on Friday, potentially part explaining how demand for IT contractors shot up in May to 66.1 from 63.7 in April.

Get in touch with UK Contractor Mortgages today to discuss your Buy to Let & Residential Mortgage requirements.

‘Inflation-induced caution’
Mr Carberry said: “The market for temporary work is stabilising faster than for permanent staff, which could suggest a little caution creeping into employers’ thinking in the face of high inflation.”

Kate Shoesmith, the Recruitment & Employment Confederation’s deputy CEO returned last week from a hiring expo in Brussels, only to similarly acknowledge inflation’s tight grip.

“We have been through tough times [chiefly due the coronavirus pandemic], followed by record-breaking successes. But the economic headwinds are [still] there,” she said.

‘Rethinking growth plans’
As to inflation’s effects, Claire Warnes of KPMG spoke of employers “starting to rethink their growth plan” as — like candidates — they face ‘the greatest costs in recent years.’

“And these are expected to increase, at least in the short term,” said Ms Warnes, KPMG’s head of education, skills and productivity.

As well as “rising business costs” for both candidates and end-users alike, she sounded more sympathetic to the latter, by pointing out organisations also face “supply chain disruption.”

Get in touch with us today to speak with the UK’s Best Contractor Mortgage Broker.

‘IT Operations and Helpdesk keeping pace with inflation’
But only last week, Indeed said that as “the economy starts to weaken,” the phenomenon of “soaring inflation” was eroding the pay gains of “most” workers.

The jobsite found exceptions though – seven occupations in total, including IT Operations and Helpdesk where pay has climbed by a healthy 7.1% in the 12 months to April 2022.

“A handful of occupational categories are seeing wage growth keep pace with inflation, largely the ones facing the most acute hiring challenges”, said Indeed’s Jack Kennedy.

The jobsite’s economist, he added: “Employers in these sectors are having to raise pay to deal with the combination of high vacancies and falling relative jobseeker interest.”

‘Hot market for the sector-qualified’
Compounding the situation, candidate availability is falling too, the REC found in May, and one consequence is “it remains a hot market for those well-qualified in their sectors.”

But another consequence of lower candidate availability is frustrated recruiters.

“Jobs that are paying well for super companies = no applicants. No amount of hunting is getting responses. Very, very few if any candidates,” posted recruiter Roseanne Stockton.

Boss at Nu-Recruit, she added: “Candidates….are excellent. But in the main, up to that point [of meeting them], I cannot find many. [There are just] two candidates per job [opening] at the moment!”

Get in touch with us today to speak with a specialist Contractor Mortgage Advisor.

‘None of their clients would touch a career-breaker’
However some recruiters aren’t helping themselves by excluding professionals who have CV gaps due to taking a career break.

The disregard of individuals with lives beyond just work disappoints agents like Kieran Boyle, owner of CKB Recruitment, who took to LinkedIn.

“Spoke to a candidate this morning [with] bags of experience, [but] taken nine years out to have children.

“The [candidate] was told by a rather well-known insurance recruiter that they didn’t want to work with her, and none of their clients would touch someone whose had a career break”.

“What a load of poppycock,” Mr Boyle continued online, reflecting in his own post. “The industry faces an unprecedented skills shortage, so why would you not try and help someone back into this amazing industry, and help one of your clients fill a role at the same time?”

‘Flexibility trumps pay’
The shortage in the IT sector in May was severe for Developers, Software Engineers, and IT and Technology generalists, as these four were scarce on both a permanent and contract basis.

No other IT contractor skills were “in short supply” in May according to REC’s member agencies, which struggled to find full-time applicants for Analysis, CAD, Data, Digital, Software and Technical Sales positions.

But the confederation has repeated its advice to employers that cash is no longer king.

“Flexibility [now] trumps pay, “ said the REC’s Ms Shoesmith. “[And that’s] closely followed by [company] culture in [terms of] candidate job search [preferences] right now.”

By Simon Moore

Source: Contractor UK

Marketing No Comments

Contractor sector sceptical of potential tax cuts from an under pressure Boris Johnson

Contractors being potentially among the one in three adults who can afford basics but not always luxuries isn’t making the contractor sector into Boris Johnson’s whispered tax cuts.

Reportedly recommended to the prime minister as a way to heal rifts after he narrowly survived a confidence vote, any tax cuts would usually be embraced by contractors.

After all, contractors are “up against IR35 reform, dividend tax rises and [potentially] an incoming hike to corporation tax,” Qdos’s Nicole Slowey pointed out yesterday.

Get in touch with UK Contractor Mortgages today to discuss your Buy to Let & Residential Mortgage requirements.

‘Token gesture’
But another specialist in contractor taxation, Graham Webber of WTT Consulting, says he expects any tax cut from Mr Johnson to be only a “token gesture”.

The PM’s trying political circumstances, plus the government’s tendency to legislate against contractors rather than incentivise it via tax cuts, makes his expectation creditable.

But in a thread featuring both the tax specialists, a Test Analyst said that if any of the tax cuts resemble Spring Statement’s 5p cut in fuel duty, the government can “keep it.”

‘Forced bribe’
“At this stage [from Mr Johnson], it would be a forced bribe,” said the analyst, a self-employed contractor. “It would only be announced to make Boris look better, not to help us”.

The prospect of tax cuts has prompted Mr Johnson’s most supportive national newspaper, the Daily Telegraph, to identify a fuel duty reduction as the most important of five he may make.

The right-leaning broadsheet said a close second would be for the PM to abolish the 5% VAT charge on heating fuels — as Mr Johnson has previously promised to do.

Get in touch with us today to speak with the UK’s Best Contractor Mortgage Broker.

‘Attacks on contractors’
Yet a consultant posted yesterday that it’s not ever Number 10’s decision to cut taxes – it’s Number 11’s.

“[Chancellor] Rishi [Sunak] and the Treasury are in charge of taxes, not Boris,” the consultant said.

“[Following the many] broken promises and attacks on contractors over the last few years, it will take a lot [for either Mr Sunak or Mr Johnson] to win back support — and trust.”

‘Government handling taxation badly’
A YouGov reading of June 2nd shows 69% of adults believe the government to be handling of the issue of taxation “badly.”

Income tax is the levy which people would least like to be increased by the government, followed by council tax, and then National Insurance, the pollster found in May.

Speaking since the findings, Keith Gordon QC has pinpointed what he would most like to see in relation to the contractor sector’s most notorious tax rule.

In a phone-in with LBC about the off-payroll rules, the tax barrister said: “I hope someone will go back to the drawing board and decide IR35 is not fit for purpose.”

Get in touch with us today to speak with a specialist Contractor Mortgage Advisor.

‘Unwelcome letters from HMRC’
A revoking of the Intermediaries legislation is even more of an outside bet than tax cuts from the prime minister, so accountants say it’s ‘business as usual’ this tax return season.

“With tax returns on the mind of many pro-active taxpayers, something often forgotten on the tax returns of those submitting early, is benefits-in-kind,” advises Adam Dove, senior client accountant at Orange Genie.

“With P11Ds not due for submission until July 6th 2022, it is important to ensure your employer has submitted your P11D and you have the details before you complete your self-assessment tax return, to avoid any unwelcome letters from HMRC with amendments, interest and, or, penalties.”

By Simon Moore

Source: Contractor UK

Marketing No Comments

Contractor mortgage broker underlines ‘get in quick’ advice, as approval times slow

A contractor mortgage broker is underlining its ‘get in quick’ advice of last week, due to a new and significant delay in how long lenders are taking to approve home loan applications.

Only on Thursday, Freelancer Financials explained that acting quickly to remortgage was key for contractors who want to mitigate the impact of future increases in the BoE base rate.

But now the broker says moving fast to lock-in a fixed rate is even more urgent, because lenders deciding to test borrowers’ resistance to the cost of living crisis is stalling approvals.

Get in touch with UK Contractor Mortgages today to discuss your Buy to Let & Residential Mortgage requirements.

‘Not just contractors’

“Mortgage applications are taking much longer to process due to lenders asking for much more information than before,” warns Freelancer Financials’ chief executive John Yerou.

“But this applies to everyone, not just contractors, as no matter who you are lenders want to accurately gauge people’s current and future living costs.”

An expert on contractor mortgages, Yerou says lenders are factoring such higher costs into their affordability calculations for customers, “which will make it more difficult to borrow.”

Get in touch with us today to speak with the UK’s Best Contractor Mortgage Broker.

‘Properties being down-valued’

But not all price tags are inflating — at least not in real-terms.

In a statement this morning, Freelancer Financials revealed to ContractorUK:

“In the past few weeks we’ve noticed that more of the lenders’ surveyors are down-valuing properties, because they don’t think they’re worth what buyers are prepared to pay.

“[Yet] we’re not expecting a sudden price reduction to hit the market, as right now, demand is still outstripping supply, which is likely to keep prices from dipping.”

Get in touch with us today to speak with a specialist Contractor Mortgage Advisor.

‘Bit more caution’

In the longer-term however, even in “the coming months,” the broker predicted that house price increases would “slow,” partly as buyers “exercise a bit more caution.”

Freelancer Financials added that the currently extended processing time to get a mortgage fully signed off means it won’t just be lenders ‘taking their time,’ but potentially buyers too.

By Simon Moore

Source: Contractor UK

Marketing No Comments

IR35 reform ‘stifling’ access to talent

The recent reform of IR35 legislation is “stifling” access to specialised talent in the UK, according to research.

Some 50 per cent of companies said IR35 was the main obstacle to hiring contractors in the past 12 months.

This has led to 70 per cent of businesses and recruiters seeing a reduction in their limited company contractor workforce, according to a survey of 1,200 contractors, recruitment businesses and end clients in February this year by Kingsbridge Contractor Insurance.

The same percentage of contractors will now only look for roles that are outside IR35 rules over the next six to 12 months, despite these accounting for 41 per cent of roles on offer.

Get in touch with UK Contractor Mortgages today to discuss your Buy to Let & Residential Mortgage requirements.

Two thirds (66 per cent) of contractors said they would not even consider a role inside IR35 rules.

Paul Havenhand, chief executive of Kingsbridge Contractor Insurance, said the UK economy is “being hampered” by a severe recruitment crisis.

“Contractors, as a highly skilled, flexible resource, could be providing a much-needed interim solution to keep things working and avoid major disruption to UK businesses,” he said.

“But there has been a 11 per cent drop in working contractors in the last twelve months.

“The complexities of IR35 and perceived risks are putting businesses off.”

The research was conducted for Kingsbridge, as part of a whitepaper called ‘IR-35 – One Year On’.

The white paper said half of recruiters surveyed feel that end clients were not prepared for the reform in the private sector, which Kingsbridge said suggests that “further education” is required.

Furthermore, it said HMRC’s Employment Status for Tax tool (Cest) is ‘not fit for purpose’ and is ‘hampering business growth’ by blocking access to contract labour.

“Recruitment agencies who reported that their end clients use Cest have seen a larger reduction of limited company contractors engaging in providing services compared to independent employment status tool users,” it said.

This was based on 38 per cent of the recruiters surveyed who said their end clients who use Cest have seen a 61 per cent or greater reduction in their contractor pool, compared with 23 per cent who use independent employment status tools.

Get in touch with us today to speak with the UK’s Best Contractor Mortgage Broker.

One criticism of the tool was that it produces indeterminate results 21 per cent of the time.

An HMRC spokesperson said: “HMRC will stand by Cest’s results provided accurate and correct information is used, in accordance with our guidance. The tool was rigorously tested against case law and settled cases by officials and external experts.”

Legislative reform

IR35 is a tax law that was reformed in April last year to require the end client, and not the contractors they hire, to decide if the working relationship resembles a self-employed engagement or employment. As part of this reform, the fee-paying party (either the end client or recruitment agency) now shoulders the liability.

The aim of the reform was to stop the promotion and misselling of disguised remuneration schemes, however the legislation has received criticism.

In April last year, the All-Party Parliamentary Loan Charge Group said the government needs to accept the “obvious reality” that IR35 legislation is “fundamentally flawed”.

The group said while it understood and supported the aim of stopping employees from seeking tax advantages for falsely claiming to be self-employed, the IR35 rules had “ironically muddied the waters and unintentionally made it harder, not easier, to define contracting and freelancing”.

An HMRC spokesperson said: “The off-payroll working rules ensure that individuals working like employees, but through their own limited company, are taxed like employees.

“The changes that took effect last year ensure that rules which have been in place since 2000 are applied correctly. We consulted extensively on off-payroll working and are continuing to deliver an extensive education and support programme to help industry and contractors implement the reform.”

“How an organisation decides to engage its workers remains a business decision for organisations to make.”

By Sally Hickey

Source: FT Adviser

Get in touch with us today to speak with a specialist Contractor Mortgage Advisor.

Marketing No Comments

IR35 ‘biggest threat’ to contracting sector

Contractors most concerned about impact of IR35 reform in 2022

Despite confidence in the economy returning since the easing of Covid restrictions, IR35 reform, which came into force in April last year, remains the stand-out concern for contractors.

A survey of more than 1,200 contractors by insurance firm Qdos found that three in five (61%) see IR35 as the “biggest threat” to working this way in 2022.

This is more than ten times the number of contractors who see Covid (6%) or Brexit (6%) as the biggest concern. The incoming increase to dividend tax was earmarked as the second biggest difficulty for this sector.

According to research by IPSE, the freelance sector contributes £303bn to the economy annually. However, changes to IR35 – which have seen the responsibility for determining tax status shift from the contractor to the business engaging them –were found to have a big impact on contractors’ income.

Get in touch with UK Contractor Mortgages today to discuss your Buy to Let & Residential Mortgage requirements.

Reform driving people out of contracting

IPSE’s survey, which echoes Qdos’ findings, revealed that seven in 10 (70.9%) independent workers believe IR35 to be the most “detrimental” factor on their financial wellbeing. 

Andy Chamberlain, head of policy at the self-employment trade body, said: “While newspapers and news programmes are filled with analysis on the pandemic, inflation and the planned rise in National Insurance, today’s research shows that there is one forgotten crisis that has been even more economically damaging to many of those who work for themselves: IR35. 

“The changes to IR35 last year have had a devastating impact, with thousands leaving contract work altogether.”

In fact, a study published by IPSE showed that the number of solo self-employed people in the UK fell by five per cent in 2021 – the figure now stands at 4.1 million compared to 4.3 million in 2020.

Chamberlain added: “While it is positive to see research today on IR35, there needs to be more attention from the press and by the government to solve the issues around the flawed reform. 

Get in touch with us today to speak with the UK’s Best Contractor Mortgage Broker.

IR35 creates ‘plethora of challenges’ for contractors

“Put simply, without media and industry pressure and a governmental review, the changes to IR35 will continue to burden the whole supply chain – making it increasingly difficult for freelancers to make a living and for UK companies to source the flexible expertise they need to get projects done.”

Seb Maley, CEO at Qdos, said that while some businesses are starting to take a more “fair and pragmatic” approach, IR35 reform has still created a “plethora of challenges” for contractors, which is “jeopardising this way of working.”

“The fact that contractors still see IR35 as the stand-out threat in 2022 – and by some distance – tells you everything you need to know about the journey ahead, along with the progress that needs to be made this year.

“[…] Far too many businesses are insisting that contractors work on the payroll, regardless of their true IR35 status. Not only will this see businesses struggle to attract the flexible talent they need to recover from the pandemic, but forcing genuinely self-employed people onto the payroll will also result in significant and needless cost rises.”

What does this mean for contractors?

Omicron uncertainty and the challenges brought on by IR35 have made life difficult for contractors already this year. And until the government step in or businesses get to grips with the reform, the issues around IR35 could continue for some time.

With this in mind, it’s vital that contractors carry out their own diligence regarding IR35 compliance. And given HMRC can launch investigations retrospectively – to when contractors held the liability – independent workers are advised to hold IR35 defence insurance, which helps mitigate the risks presented by this complex and controversial legislation.

Source: Contractor Weekly

Get in touch with us today to speak with a specialist Contractor Mortgage Advisor.

Marketing No Comments

Number of outside IR35 contracts surges since IR35 reforms

The number of contractors in the UK who have worked outside IR35 following the roll out of reform in the private sector this year has surged by 83% since 6 April 2021, according to research by Qdos.

Qdos’ annual contractor survey, which 1,248 contractors participated in, shows that nearly two thirds (64%) of contractors have been able to secure a contract deemed outside of IR35 since reform.

This is an 82.8% increase on the contractors (35%) who had been placed outside IR35 by their end client in the lead up to and upon the arrival of the changes.

Get in touch with UK Contractor Mortgages today to discuss your Buy to Let & Residential Mortgage requirements.

Despite the increase, contractors said securing an outside IR35 role hasn’t been straightforward. Less than a quarter, or 22%, said it has been easy, 40% have not noticed any change in difficulty since 6 April, while 38% said there is now a scarcity of contracts classed outside IR35.

Due to this, IR35 reform was highlighted by 72% of contractors as the event that impacted them most in 2021, behind Covid-19 (20%). Meanwhile, 61% still see IR35 reform as the biggest threat to this way of working in 2022.

Get in touch with us today to speak with the UK’s Best Contractor Mortgage Broker.

Qdos CEO, Seb Maley, said, “The surge in contractors able to secure contracts outside IR35 since April will give many of these workers a boost heading into the new year. That the number of contractors being placed outside IR35 has nearly doubled is the first real indicator that more businesses are managing reform in a pragmatic way. It also shows that fewer firms are forcing everyone onto the payroll – a needless and expensive approach in more ways than one.”

“There is still plenty of room for improvement, though. Outside IR35 contracts are on the up, but even so, lots of contractors are still struggling to source these. IR35 itself has also been earmarked by contractors as the biggest threat to this way of working next year,” Maley said. “In 2022, businesses that have banned contractors in response to reform should reverse these costly decisions, taking note of the rising number of firms benefiting from engaging them compliantly outside IR35.”

Source: SIA

Get in touch with us today to speak with a specialist Contractor Mortgage Advisor.

Marketing No Comments

Contractor rates rocket since IR35 reforms

Almost nine in 10 businesses have been forced to increase rates of pay for contractors since IR35 rules were extended to the private sector in April.

A poll by Brookson Legal found that three-quarters have had to increase rates by more than 10%, more than double the average annual wage growth of 4.9% reported by the Office for National Statistics between July and September this year.

The reforms, which were introduced for public sector employers in 2017 and introduced this year to the private sector after being delayed by the pandemic, push the responsibility for determining a contractor’s employment and tax status onto the business rather than the individual.

Get in touch with UK Contractor Mortgages today to discuss your Buy to Let & Residential Mortgage requirements.

At the same time, businesses are facing huge talent shortages and need access to flexible skills, particularly in areas such as haulage and logistics, where IR35 rules have been cited as one of the reasons behind the HGV driver shortage.

More than three-quarters of employers are now finding hiring flexible workers to be challenging or very challenging, according to Brookson. Despite this, 90% plan to extend their use of contractors over the next 18 months.

However, while around a third (31%) are concerned about unforeseen tax bills if they use contractors who appear to be outside IR35 but are then found by HM Revenue & Customs to be inside the regulations (and therefore liable for higher tax and national insurance), more are worried about costs and their ability to attract talent.

More than half (53%) cited contractor costs as driving their business behaviour over IR35, and 42% cited talent attraction. Forty-two percent also felt project delays had driven choices over whether to hire contractors.

Within businesses, the CEO takes responsibility for decisions on contractor recruitment in 56%, and the board in 24%. In others it is delegated to other departments.

Get in touch with us today to speak with the UK’s Best Contractor Mortgage Broker.

Matt Fryer, head of legal services at Brookson Legal, said access to a talented flexible workforce was “vital to growth”.

“With job vacancies reaching an all-time high, presenting an attractive, compliant and competitive IR35 offer to talent is the best way to regain some control in an uncertain environment.
“It is also crucial to unlocking the benefits of a truly flexible workforce in the longer term. A robust and evolving IR35 solution will not only help companies recover and grow in the wake of the pandemic, it will ensure they are more agile and able to scale their workforce up and down to meet project needs.”

More than half (51.4%) of those polled by Brookson relied on the government’s Check Employment Status for Tax (CEST) tool to make status determinations, despite criticism that the tool delivers inaccurate status information.

Just over a third asked contractors to assess their own status, while 32.4% delegated the decision to recruitment agencies.

But Fryer warned that these approaches could be laden with risk. He added: “These approaches carry both the risk of tax liabilities from HMRC and can create barriers to growth if not used correctly, which will likely increase the cost of resourcing even further.”

Last week, a survey of 3,750 contractors by compliance platform IR35 Shield found that 47% of contractors had worked with companies where the use of contractors had been banned since the reforms were introduced.

A third felt IR35 reform would cause long-term damage to organisations, with many cancelling projects as a result.

By Jo Faragher

Source: Personnel Today

Get in touch with us today to speak with a specialist Contractor Mortgage Advisor.

Marketing No Comments

Over a third of contractors have left self-employment since IR35 changes

More than a third, or 35% of contractors in the UK have left self-employment since the changes to IR35, either moving into permanent employment, retiring, working overseas or simply not working, according to research from The Association of Independent Professionals and the Self-Employed (IPSE).

The research also found that of those who remain, 34% are now working through “unregulated” umbrella companies and 36% are working through engagements deemed ‘inside IR35’.

Meanwhile 80% of contractors working inside IR35 said they had seen a drop in their quarterly earnings, by an average of 30%. A quarter said their income had dropped by over 40%.

Get in touch with UK Contractor Mortgages today to discuss your Buy to Let & Residential Mortgage requirements.

According to IPSE, a significant problem seems to be the implementation of the rule changes by clients. Under the new rules, clients are now required to give contractors a Status Determination Statement (SDS) to confirm their IR35 status, but nearly two out of five (38%) said their clients had not done this.

One in five (21%) contractors said their clients had also blanket assessed all engagements as inside IR35, while one in ten (11%) said their clients had blanket banned contractors altogether. Another 34% said they were now having to work through “unregulated” umbrella companies for their clients.

Nearly a quarter (23%) of all contractors working through umbrella companies say they are dissatisfied with their umbrella company, compared to 46% who are satisfied.

One key area of concern is business expenses, which most contractors now cannot claim from their umbrella company: 55% were dissatisfied with this. Another key concern is the cost of Employer’s National Insurance: 33% said they were dissatisfied with this.

HMRC introduced IR35 reform to the private sector in April 2021 in the expectation that compliance will become easier to police, that end-users will take a more compliant approach to IR35 assessments and that they will be more likely to conclude that contractors are in scope, resulting in increased tax and national insurance contributions.

Get in touch with us today to speak with the UK’s Best Contractor Mortgage Broker.

Andy Chamberlain, Director of Policy at IPSE said, “We are urging government to review the situation in the contracting sector and be open to radical steps based on that, including, if necessary, repealing the changes altogether. Government must also urgently set out detailed regulations for how umbrella companies should operate and also work to clear the confusion across self-employment by clarifying when it is right for people to operate as sole traders, employees or limited companies.”

Dave Chaplin, CEO of IR35 Shield said, “Whilst freelancers have succumbed to the triple whammy from the pressures of Brexit, the pandemic and the latest incarnation of IR35, our experience suggests this is a bottoming out of the market, and that it is starting to grow again.

“Many firms choose what they may have considered the easy option, by attempting to remain cost neutral and risk free by pushing a blanket ban on contractors from operating via PSCs (personal service companies). But some have since realised this has put them at a disadvantage in the competing market for talent compared to firms who have implemented processes enabling them to continue to hire contractors on an ‘outside IR35’ basis,” Chaplin said.

Crawford Temple, CEO of Professional Passport, an independent assessor of payment intermediary compliance said, “My message to workers is that if they are offered something that is too good to be true then it is probably a disguised remuneration scheme that will set them up for financial difficulties in the future. HMRC already holds all the information it needs to stamp out disguised remuneration schemes and rid the industry of criminal activity but is not acting on it. As a result, the lack of inactivity has enabled more and more schemes to set up and more and more contractors duped into taking on significant personal financial risk as a result.”

Earlier this year the Department for Business, Energy and Industrial Strategy published its consultation report which confirmed that the new enforcement body will also regulate umbrella companies.

Source: SIA

Get in touch with us today to speak with a specialist Contractor Mortgage Advisor.