fb-pixel
News

IR35 private sector changes to go ahead next week

Avatar
Written by Caunce O'Hara
Last updated March 29, 2021

Changes to IR35 in the private sector will go ahead on 6th April 2021, despite hopes for a further delay.

With just 1 week left until the new legislation is underway, those end clients engaging contractors who have not yet prepared for the changes, must act now.

What’s changing?

IR35 was created to recover tax revenues from contractors seen to be working as ‘disguised employees’ and paying less tax than they should as a result.

Up until now, contractors in the private sector have been responsible for determining their own IR35 status. Contractors have also carried the liability for any unpaid tax and National Insurance contributions, if IR35 is deemed to apply.

From April 6th, contractors engaging with medium sized and large businesses will no longer have this responsibility.

Medium sized and large businesses employing private sector contractors will instead be responsible for determining the contractor’s employment status for tax.

Small businesses, who meet at least two of the following criteria, will be exempt from the changes:

  • Annual turnover of no more than £10.2 million.
  • Balance sheet total of no more than £5.1 million.
  • No more than 50 employees.

As a contractor, you may find you are moved onto your client’s payroll, resulting in a lower take home pay.

For end clients, these changes bring an added burden of understanding IR35 and determining a contractor’s IR35 status, by way of a Status Determination Statement (SDS).

 

What do I need to do before April 6th 2021?

End-client businesses that engage contractors, whether directly or indirectly via agencies, must first determine whether they are medium or large sized businesses, for the purposes of the IR35 legislation.

If they are, they must decide as to whether contractor engagements fall within IR35 or not.

While you do not have to issue a formal Status Determination Statement (SDS) before 6th April 2021, if you did choose to do so, it will be valid from 6th April 2021. Either way, it is essential that you assess your contractor workforce and gather the facts needed to make an IR35 decision by looking closely at contracts and working practices.

To issue an SDS, you need to have a good understanding of the fundamentals of IR35, which unfortunately are not straight forward.

To learn more on how to make an IR35 status decision, read Factors That Determine IR35 Status.

For contractors who are unhappy with the outcome of their SDS, it’s important that you speak with your end clients sooner rather later.

Every end client is obliged to implement its own disagreement process to allow you to raise any objections to the Status Determination Statement (SDS).

To find out more about the client-led disagreement process, read What is my IR35 Status?

If the client you’re working with has yet to make an IR35 status decision, you may have an opportunity to influence the outcome.

You can do this by seeking an independent contract review, which will not only assess the current position, but will offer your client evidence that they can use to demonstrate that they have taken reasonable care when making their decision.


Caunce O’Hara offer a range of business insurance solutions to help contractors stay protected including Tax Enquiry & Legal Expenses Insurance, which provides cover for costs incurred by a HMRC investigation. Tel 0333 321 1403.

CLICK HERE FOR A QUICK ONLINE BUSINESS INSURANCE QUOTE

Markel Tax offer specialist IR35 tax services to help end client decision-makers ensure they are compliant with the legislation.  Agencies who may be concerned about their fee payer liability can also consider insurance. To find out more, please contact Markel Tax on 0345 223 2727.


Avatar
Written by Caunce O'Hara
Last updated March 29, 2021

Related IR35 content

DWP hit with huge tax bill for historic IR35 contractor status assessment errors

It has emerged that the Department for Work & Pensions (DWP) was hit with a huge £87.9 million tax bill…

Read more

IR35 private sector changes to go ahead next week

Changes to IR35 in the private sector will go ahead on 6th April 2021, despite hopes for a further delay….

Read more

Kaye Adams wins case and is ruled outside IR35 due to being ‘in business on own account’

In a landmark IR35 case that will be welcomed by PSCs, but will not be widely applied, television presenter Kaye…

Read more

UK Supreme Court rules that Uber drivers are workers not self-employed

The Supreme Court’s unanimous decision should come as no surprise given that Uber’s appeal follows an Employment Tribunal ruling against…

Read more

Private sector IR35 soon to be reality

On April 6th 2021, the contractor’s worst scenario will become reality… IR35 in the private sector will finally go live….

Read more

Just 2 months left until the IR35 reform: what do contractors need to know?

On the 6th April 2021, the IR35 private sector changes will come into effect. With this date now just a…

Read more

The blanket approach to IR35

The delay in the introduction of the IR35 legislation allowed contractors and their clients extra time to prepare. It also…

Read more

IR35 news: Eamonn Holmes loses his IR35 case against HMRC

Holmes, a broadcaster for over 40 years, was providing his services through a limited company called Red, White and Green…

Read more

HMRC “kicks back” in latest IR35 case

HMRC “kicks back” at Upper Tribunal in latest win against Paul Hawksbee In July 2019 we saw the fight between…

Read more

Off-payroll working in the private sector

Despite the protests and lobbying of the Government, the only reference in the Budget notes makes it very clear that…

Read more

The impact of finance sector IR35 decisions on contractors

IR35 reform to the private sector was already having a negative impact on contractors working in the finance sector prior…

Read more

Lord’s committee expresses concerns over IR35

IR35 off-payroll reform was due to be rolled-out to the private sector on April 6th of this year, but due…

Read more

Suggestions to move IR35 reforms to 2023 are rejected

Amendments to the IR35 private sector are set to go ahead from April 2021, despite suggestions from a Conservative MP…

Read more

COVID-19 and IR35: Should your clients relax now the legislation is postponed?

Steve Barclay, the Chief Secretary to the Treasury, announced that due to the effects of Covid-19 (Coronavirus), the changes to…

Read more

11th hour delay for IR35 private sector reform due to COVID-19 welcomed

The Government has delayed its controversial IR35 private sector reform by one year, until April 2021, because of the COVID-19…

Read more

No delay to IR35 rollout as the Government launches off-payroll review

The Government launched its off-payroll review on January 7th with regards to the implementation of the changes to the off-payroll…

Read more

What are the political parties saying about IR35?

In April 2020 the contractor and freelance community are set to be hit by changes to IR35 legislation which could…

Read more

Six reasons for PSCs to be proactive to respond to the IR35 private sector changes and not wait until April 2020 to do so!

Since April 2000, the Intermediaries legislation has made the individual contractor trading through his/her own Personal Service Company (PSC) the…

Read more

What impact will IR35 reforms have on North Sea operators?

With high levels of talent engaged through off payroll structures in the energy sector, the North Sea operators will feel…

Read more

Are you ready for IR35 changes?

Proposed changes to IR35 legislation could mean thousands of contractors may pay more tax. With the Government’s consultation on contracting…

Read more

IR35 and CEST Update

The IR35 story continues to rumble on taking twists and turns along the way and most of us believe it…

Read more

U-Turn on Self-employed NIC but no change to Public Sector rules on IR35

The ink has yet to dry on Philip Hammond’s first budget as Chancellor but his proposed national insurance increases for…

Read more

IR35 Products & services

Caunce O’Hara’s partnership with Markel enables us to offer a broad range of IR35-based products to protect contractors, fee-payers and end clients across the UK.

IR35 Hub Related IR35 content