IR35 - Off Payroll Working Rules
Posted on 15th March 2021 at 16:56
The changes relating to the 'Off payroll working rules', deferred from April last year due to implications caused by the COVID-19 pandemic, now come into effect from the 6th April 2021.
What is IR35 - 'Off Payroll Working Rules'?
The rules apply if a 'worker' (also sometimes known as a 'contractor') provide services through their own limited company or another type of intermediary to the client.
* An intermediary will normally be the workers own personal service company (PSC), whereby they are the sole director / shareholder, but it could also be any of the following:
• a partnership
• a personal service company
• an individual
Broadly speaking, the rules are there to ensure the workers providing their services to the client, pay the same tax / National Insurance contributions as if they were employees, and are therefore not deemed to be employees in disguise.
To find out how to prepare in advance of these changes, please click HERE...
Who does it affect?
• a client who receives services from a worker through their intermediary
• a worker who provides their services through their intermediary
• an agency providing workers’ services through their intermediary
There is an online tool available on the governments website to check the employment status for tax purposes - click HERE...
How to determine IR35
Key factors include:
• Does the contractor have to carry out the work personally, rather than being able to send a substitute?
• Does the client have to provide the contractor with work, and / or does the contractor have to carry out any work that the client requests?
• Does the client have control over how, where and when the contractor carries out the work?
* HMRC will determine by looking at the whole picture, from the engagement, contract and whether there is an obligation, to the overall practice.
From the 6th April 2021
• All public sector authorities / medium and large-sized private sector clients will be responsible for deciding if the rules apply
• If a worker provides services to a small client in the private sector, the worker’s intermediary will remain responsible for deciding the worker’s employment status, and if they fall inside or outside the scope of IR35
* If it is deemed that the rules apply, then tax / National Insurance contributions must be deducted from fees and paid to HMRC.
* HMRC IR35 tax tribunals have reached different conclusions regarding television / radio presenters recently, including, Lorraine Kelly, Eamonn Holmes and Kaye Adams.
For help and advice, please contact us on 0121 550 8509 or email firstname.lastname@example.org.
Whilst every effort in ensuring the accuracy of the content of these notes has been considered, we cannot be held responsible in any way in regards to any consequences and/or decisions arising from the information provided. For specialist advice tailored to your individual circumstances - please seek professional advice and contact us on the above details.
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