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BBC payroll review may lead to bad news for contractors

UK freelance community members say that the BBC’s decision to review pay arrangements for more than 800 of its contractors may lead to bad news across the board.

The Beeb is looking into any of its freelancers who use their own personal service company to receive their pay and subjecting them to a new employment test. Most say that this step might lead to other public organisations following in the broadcaster’s footsteps, though there are many industry experts that dispute this possibility.

BBC chief financial officer, Zarin Patel, released a statement recently on the issue, remarking that the BBC has received confirmation from Deloitte that it was both ‘legal and appropriate’ to use a freelancer through their own PSC. However, even in this case, some of the broadcaster’s talent may be unable to pass Her Majesty’s Revenue & Service’s IR35 ‘disguised employment’ test, ending up being re-categorised as employees instead of freelancers.

For any BBC staff member that earns £50,000 or more in a year – or anyone who receives their pay through a personal service company – the broadcaster will be applying the new test. Around 131 people may end up being given the opportunity to become permanent employees of the company as a result, once their existing contract runs its course.

HMRC has been pushing IR35 quite strongly over the past few months after reports have emerged that many freelancers could be abusing personal service companies as a way to avoid paying higher income tax. Employers may be complicit in the arrangement, the taxman says, since paying a freelancer results in lower National Insurance payments made by the employer as well.

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