Please utilise our free IR35 calculator to assess the potential impact that the Intermediaries legislation (IR35) may have on your income.
Please note that the taxation calculations under IR35 in the private sector until April 2021, are different to what the taxation calculations will be after 6 April 2021 when the off-payroll legislation rules which operate in the public sector will also be applied to the private sector. The difference being that the tax deducted for an engagement inside IR35 after April 2021 will not include the 5% notional expense allowance and may include deductions for the Apprenticeship Levy meaning that the tax burden for the contractor will be higher.
The off-payroll working legislation was introduced to the public sector in 2017. It was originally planned for introduction to the private sector in April 2020, but due to the Coronavirus pandemic it was delayed until 6 April 2021.
Additional Regulation with new decision-makers and new entities bearing the liability
The legislation (Chapter 10 of ITEPA) an addition to the original IR35 legislation (Chapter 8 of ITEPA) and means that the vast majority of end clients will be making the IR35 status decision with penalties for not doing so correctly. The entity which pays the contractor known – often a recruitment agency – becomes the ‘fee payer’ and may have the liability when the IR35 status decision is found by HMRC to be incorrect.
However, as a contractor engaged by a small company (as defined by the Companies Act), you will continue to have the same decision-making responsibilities and liabilities as before. We recommend that you speak to an IR35 expert if you have any concerns regarding your own IR35 status.
Ultimately, any contractor ‘caught’ working inside IR35 will pay significantly more tax.
If you would like to speak to one of our IR35 experts about your IR35 status, please contact 0333 321 1403 for details and to book an appointment.