Managed Services Companies Legislation
Pre Budget Report on Managed Personal Service and Composite Company Solutions.
On December 6th the Chancellor announced a Consultation Paper and Draft Legislation to target various managed company solutions, the scheme providers, owners and workers.
The new rules will apply to Managed Personal Service Companies and Managed Composite Companies. Umbrella Companies are not being targeted, and are mentioned just twice in the 72 page notice.
Broadly for Managed Personal Service Companies and Managed Composite Companies, the proposed new rules envisage the following:
- PAYE and NICs on all payments to workers including dividends
- Travelling expenses no longer claimable
- Personal liability for the tax and NIC to rest with the solution provider and its associates
These measures may effectively wipe out 99% of the benefits of such schemes.
Independent Personal Service Companies (i.e. those that are not ‘managed’ by a solution provider) will not be caught. This means that IR35 will no longer apply to Managed Service Companies but it will continue to apply to independent Personal Service Companies.
Work2live fully supports measures to introduce clarity in how contractors can operate. Based on the draft legislation and as an umbrella company Work2live is not affected by these proposed changes. We offer a contracting solution that is IR35 safe, with clear employment status and which protects contractors, agencies and clients.
We will continue to monitor the implementation of this, and other legislation with our professional advisers to ensure a safe solution to all contractors, agencies and clients using our service.
