IR35 changes to take effect this April, 2021
Contractors and off-payroll working for the private sector, changes coming in April.
Wondering where we are now with IR35, when it applies, what companies it applies to or whether it will be delayed again? You’re not alone.
Many of our clients undertake consulting work for their clients via their own limited company (intermediary).
For many, there is always the danger of being seen as a “disguised employee”.
If this happens, then they could fall under the IR35 rules, where, under the current regime, they must pay nearly all the company income to themselves as salary, deducting PAYE and National Insurance. In the past the decision as to whether to apply IR35 rested with the contractor.
This changed for those working for the public sector in 2017, and in April this year, it will change for some of the private sector, too (postponed from last year).
Will IR35 be delayed again?
There is no indication that it will be delayed again.
For those working for LARGE (clarified below) clients, it is now the end client that must decide whether IR35 applies; and if they believe that is does, they will deduct PAYE and NI before paying an intermediary company.
Will the changes affect me?
The new changes will affect any of our clients who are working for “large” companies via their own limited company.
Large in this context means any two of the following:
- Turnover of more than £10.2 million
- Balance sheet total £5.1 million
- More than 50 employees
From this April, the end client large company will be required to determine a worker’s employment status in a Status Determination Statement (SDS), and communicate that determination.
If they decide that a worker is caught by the new rules, they will deduct PAYE and NI from any payment made for services.
The worker (or deemed employer if there is an agency involved in the middle) has the chance to challenge SDS and the end client will have 45 days to confirm, with reasons, why it upholds the SDS or withdraw and revise their decision.
More detailed information is available on the gov.uk site here.
Grounds to challenge an SDS or think that the IR35 rules shouldn’t apply to you?
If you believe that this could affect you and any contracts you may enter into covering April 2021 and beyond, please talk to us, especially if you believe that you may have grounds to challenge an SDS, and you believe that IR35 rules should not apply.
This was published on 5 February 2021.