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Changes to the off-payroll working rules are coming into force this tax year and are due to generate £3.1bn in additional tax revenue between 2020 and 2024. Keep reading for more details…

WHAT?

IR35, otherwise known as the ‘intermediaries legislation’ has been enforced to stop workers claiming to be contractors in order to potentially reduce their tax liabilities.

This can be a grey area as there is no definitive answer to IR35, however the HMRC have provided an online tool to help determine whether an worker should be classed as employed or self-employed. Please click through here to be taken through to HMRC tool.

The rules around employment status have not changed, however, changes coming into force change the responsibility for determining status onto the End Client (or would be employer).

WHEN?

The new IR35 rules will officially be enforced from 6th April 2020.

WHO?

You may be affected by these rules if you are:

  • a worker who provides their services through their personal service company (intermediary)
  • a client who receives services from a worker through their intermediary
  • an agency providing limited company contractors

 The rules apply if a worker provides their services to a client through an intermediary but would be classed as an employee if they were contracted directly. If these rules do apply, tax and National Insurance contributions must be deducted from fees and paid to HMRC. Being caught within the legislation can lead to workers paying an additional 25% tax annually.