UK: IR35 changes to off-payroll working now in force
April 6th marks new off-payroll working rules for contractors and intermediaries
From 6th April 2021, off-payroll working rules are changing. Effective from today, medium or large-sized private sector clients will be responsible for deciding their worker’s employment status. This brings the private sector further in line with rules introduced for the public sector in 2017.
HMRC have designed these rules to assess whether contractors are genuine contractors rather than ‘disguised’ employees. ‘Disguised’ employees refer to contractors and their clients who take advantage of the tax efficiency that comes with working through a limited company.
Under the new rules, if clients receive services from their worker, they must give their worker an employment status determination and their reasons behind this decision. If the worker disagrees with their client, they have a right to dispute the decision. This also applies to selected charities and third sector organisations since reforms in 2017.
On the condition that IR35 working rules apply, the employer must deduct Income Tax and National Insurance contributions from their worker’s fees and pay them to HMRC. Employers should also pay employer National Insurance contributions and the Apprenticeship Levy if applicable.
Exceptions to IR35 apply for small private or voluntary sector organisations.
At Mauve, we understand that the complexities of IR35 may be daunting as a contractor or intermediary. That is why we have created a 5-step checklist to help you manage the changes to the off-payroll working rules.