Everything you need to know about IR35
GET PREPARED FOR IR35 – EVERYTHING YOU NEED TO KNOW
IR35 may sound like something that you don’t need to take notice of, or a phrase that you’ve heard of in passing, but dependent on your job role and status, it could affect you or your business. We will help you understand everything that you need to know about IR35.
What is IR35?
IR35 are a set of tax laws that form part of the Finance Act. This legislation has been created to prevent workers fraudulently claiming to be contractors for tax benefits. The laws relating to IR35 are more commonly known as The Off-Payroll Working Rules by the government.
How does IR35 affect me?
IR35 and the rules that surround it can apply if you are a worker that provides services through an intermediary. If you were to be contacted directly by the client, and not through the intermediary, you would then be classed as an employee, and then IR35 rules would apply. So, it is important to know what your status as an employee is, and to make sure that you are IR35 compliant.
HMRC have now published draft legislation to update the current IR35 rules. This reform includes making all public authorities as well as medium and large sized clients responsible for identifying the tax status for any contractors they engage from the 6th April, 2020. However, if you are a small sized client operating in the private sector, you won’t have to decide the employment status of your workers, this responsibility will remain with them.
So, again, it is vital that whether you are an employee or a business, you know your current status.
How do I prepare for IR35?
- As in a lot of cases the employer will now be responsible for deciding if the new rules apply, take notice of the current IR35 status of yourself and any employees, contractors or staff associated with your business and check that you conform to the current rules and regulations
- Keep detailed records of employment status determinations and the reasons for this
- Have a process in place that is ready to deal with any matters or disputes that may arise from employment status determinations
- Know the size of your business. Medium and large-sized private sector clients need to make sure that the new rules are applied, you can use this gov.uk simplified test to identify whether the new rules apply to you: https://www.gov.uk/guidance/april-2020-changes-to-off-payroll-working-for-clients
- Check your business type. If you are a public sector client, you need to continue to apply the current IR35 rules.
Don’t forget that we are here to help you with updates and changes to IR35 legislation. Get in touch with our award winning team today for more information.