The purpose of the off-payroll working rules (IR35) is to ensure that individuals who provide services through their own limited companies, pay broadly the same income tax and national insurance contributions as other individual employees. The rules apply if/when a worker provides their services to a client through an intermediary but would be classed as an employee if they were contracted directly.
Before April 2017, workers operating through their personal service company (intermediary company) were responsible for determining whether a contract/assignment was inside or outside IR35 rules and paying any employment taxes and National Insurance Contribution (NIC) due.
These rules are changing.
From 6 April 2021, all public sector clients and medium or large-sized private sector clients will be responsible for deciding your worker’s employment status. This includes some charities and third sector organisations.
If the off-payroll working rules apply, your worker’s fees will be subject to tax and National Insurance contributions.
In this briefing note, we cover:
- Who the new rules apply to
- What you need to do as an end client company
- HMRC’s Check Employment Status for Tax service
- What if the contractor/worker disagrees with the Status Determination Statement
- Small business exemption
- Overseas companies
If you have any queries in relation to your specific situation, please contact Joanne Holland, Personal Tax Director, Beavis Morgan.