Be prepared for the impact of IR35
27 February 2020: from 6 April 2020, changes to the off-payroll working rules (IR35) may increase the tax charge on contracts for work with large and medium-sized businesses. Whether you are working for a big firm or supporting your clients through the process, ICAEW has resources to help you get to grips with the new rules.
Off-payroll working can provide benefits for the contractor and the client organisation, which may include paying less tax. Listen to a concise overview of off-payroll working, what it means in simple terms and the changes brought about by IR35 in this short webinar.
Before April 2017, when an individual provided services to an organisation through a personal services company (PSC), the individual was responsible for identifying whether they would have been deemed an employee for tax purposes and, accordingly, whether income tax and class 1 national insurance contributions must be paid.
The rules are changing for many and put the responsibility for determining the employment status of contractors onto those engaging them. This came into force for contracts with public sector organisations in April 2017; from 6 April this year it will extend to contracts for work with large and medium-sized private businesses. The old IR35 rules continue to apply to contracts for work with small firms.
Deciding if a particular engagement is caught by the off-payrolling rules is an important decision and getting it wrong can be expensive. This guidance from the Tax Faculty can help in deciding whether IR35 applies, as well as HMRC’s employment status checking tool and its guidance on supervision, direction and control.
The Tax Faculty has published details of what the changes coming into effect in April 2020 mean for large and medium-sized private companies. It covers:
- Establishing the size of the client – small, medium or large?
- The Status Determination Statement
- Disagreement with the Status Determination Statement.
This month, ICAEW has also updated its engagement letters and accompanying schedules to provide more support on off-payroll working.
On 19 February, the Tax Faculty responded to HMRC’s consultation on draft secondary legislation to implement these changes and notes that the off-payroll working regulations were poorly drafted and that HMRC’s guidance is incomplete. Read the consultation response in full.
You can see all the latest guidance and support on IR35 and off-payroll working at icaew.com/IR35
Members of the Tax Faculty can access additional detailed support on IR35, including two new webinars to be broadcast after the 11 March 2020 Budget announcements:
You do not have to be an ICAEW member to join the Tax Faculty. Join now and access all of its material on IR35.