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IR35: Off-Payroll Working In The Private Sector

New rules apply from the 6th April 2021 ...


Posted by Helen Beaumont on 20/01/2021 @ 8:00AM

As of the 6th April 2021, the Government has introduced new IR35 rules for individuals who offer services via an intermediary to medium or large-sized businesses ...

New private-sector IR35 rules mean you could be classed as an employee from the 6th April 2021!

New private-sector IR35 rules mean you could be classed as an employee from the 6th April 2021!

copyright: kasto / 123rf

An 'intermediary' could be another actual individual, a partnership, what's called an unincorporated association or an actual limited company. The most common structure is a company which is what I'm going to discuss in this blog posts.

"Similar IR35 rules were introduced in 2017
for the public sector!"

The effect of these new rules, should they apply to you mean the medium or large business calculating a 'deemed payment' based on the fees charged for the services of the individual. This means that PAYE and employee's National Insurance contributions will be deducted from the payment just as if the individual was a salaried employee.

Practically, an individual will no longer benefit from the potential tax advantage of receiving income via their own personal services company. Businesses may also now want to renegotiate contracts as they now have the added cost of employer's National Insurance contributions.

"These rules apply from the 6th of April 2021!"

However, the changes only apply to medium or large businesses. A small company receiving services from you is exempt from the new rules if it has a turnover of less than £10.2 million or has less than 50 employees. You need to ascertain this information before entering into a contract with them so you know who is responsible for making status decisions and for paying tax.

However, if you are considering a contract with a medium or large company, HMRC - which will help them decide on how they are going to pay you.

Should it be determined that what you do for a business would be classed as employment by HMRC, a Status Determination Statement will be issued giving the reasons why. If you disagree with the SDS result, you can use the tool yourself to see if you can come up with a different result and then discuss it with your contracting company to see if they will change their mind and pay you without deductions.

"HMRC has been enhancing the IR35 checker though it is still considered to be flawed!"

If you are treated as an employee and the business you are working for deducts PAYE and NIC then you should receive a P45 at the end of your contract and a P60 if it crosses the 2021/22 tax year. You will need to include this information on your self-assessment tax return.

Remember, nothing changes if you work with small businesses.

Until next time ...



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About Helen Beaumont ...


Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.