The Draft Legislation for Off Payroll working was published on the 11th July 2019 within the Finance Bill for 2019/20.
IR35 is the legislation that seeks to determine tax status for individuals working through a limited company, or a PSC as commonly known.
In the Public Sector Limited company contractors have been responsible for determining their own tax status and paying the relevant tax accordingly up until April 2017, where that responsibility then fell to the end client.
As of April 2020, these rules will be rolled out to the Private Sector, where the responsibility for operating the Off-Payroll legislation will sit on the organisation, agency, or other third parties engaging the worker. It will affect all payments made on or after 6th April 2020 to limited companies.
The HMRC have introduced this legislation to:
Improve compliance: The change is aimed at improving compliance, in relation to the payment of tax and national insurance for those working through Personal Service Companies. Currently, the government believe that non-compliance is widespread with only 10% of individuals who should be inside IR35 paying the correct levels of tax and National Insurance.
Align industries and sectors: As the government believe the Public Sector IR35 reforms have been a success they feel it necessary to align it to the Private Sector. It is believed the changes in the Public Sector have seen an extra £550M in extra National Insurance and tax payments.
Huntswood will be working with its clients to agree the status determination of all of our Associates. We will be also talking to our Associate population, by email and face to face about what these changes mean for them and the options available to them.
In the meantime, if you have any questions please don’t hesitate to contact us on firstname.lastname@example.org