If you operate as a limited company contractor, then it’s likely you will be affected by reforms to IR35 rules in April 2020.

If your status is being changed to INSIDE IR35…

You will need to look at switching to a compliant Umbrella company.  It may be possible to keep working through your PSC, or it may be best to make your PSC dormant for the time being.  There are a number of options – please talk to us before you decide.

If your status is going to remain OUTSIDE IR35…

You will be able to continue to operate through your PSC, but you may be required to undergo status assessments more often.  Again, talk to us about how your end hirer intends to determine your status so that we can help you manage your finances properly.

What’s happening?

Under the new rules, responsibility for determining your IR35 status, and ensuring the correct taxes are paid, will switch to your end hirer and employment agency, if you use one.  (Please note, only medium and large businesses are affected.  If your end hirer is ‘small’ then the reforms do not apply – you continue to be responsible for determining your own IR35 status and ensuring the correct taxes are paid).

This change has significant implications for contractors, employment agencies and end hirers alike.  In theory, if you’re outside IR35 now, you should remain outside when the new rules are introduced.  However, the shift in risk to agencies and end hirers could mean that your IR35 status is changed.  If this happens, it is likely you would have more tax to pay, so the amount you take home would be reduced.

It is important to be aware of the reforms and to understand how your employment agency and end hirer intend to respond, as this will help you decide what options are open to you.

How might end hirers and employment agencies respond?

As stated, under the new rules your end hirer becomes responsible for determining your IR35 status and could be liable for unpaid tax, should there be a successful challenge regarding your status.  End hirers may simply decide to mitigate their risk by classifying all contractors as ‘inside’ IR35 (this is certainly the case in the banking sector at present) which means contractors become subject to tax and National Insurance, just like any other employee, so your take-home pay would be reduced.

In many instances, end hirers are banning the use of PSCs and requiring contractors to work through a compliant Umbrella company instead.

If this is the case, we can help you.

Our parent company, JSA, operates one of the UK’s biggest FCSA-accredited Umbrella companies, supporting thousands of contractors to work compliantly.  It’s easy to switch to JSA.  If we look after your PSC accounts, you can use JSA Umbrella for FREE (Ts and Cs apply). Please get in touch to find out more.

Umbrella as a temporary option

It may be that Umbrella can be used as a temporary option.

When similar IR35 changes were introduced in the public sector in 2017, a large number of end hirers treated all contractors as if they were ‘inside’ IR35.  However, after a few months the rules bedded-in and end hirers began to look assessments on an individual basis.

If this happens, it may be that you can switch back to using your PSC, or use a combination of Umbrella and PSC, in which case it’s best to keep your PSC open, at least for the time being.  Again, this process is seamless when you work with us. Please note, there are certain rules you need to abide by if you choose to keep your PSC open, please get in touch for more information.


Call us today on +44 (0)20 7078 0211 or


Here to help

IR35 rules are complex. If you are a limited company (PSC) contractor and would like to find out more about the new rules and how you can mitigate the impact, please contact our account teams for more information