The April 2020 off-payroll changes to the private sector represent a massive challenge to the contracting industry. Here we have included some of the most common FAQs we’ve been asked about the IR35 reforms.
The Intermediaries Legislation was introduced in 2000 to tackle 'disguised employment', where an individual uses a limited company to carry out professional services, but works in a manner more like an 'employee'. Your take home pay will be significantly lower if your contracts fall within its scope.
Private sector IR35 changes from April 2020
So-called 'off payroll' changes to the IR35 rules were made to public sector organisations from April 2017, and will also hit private sector businesses from April 2020, following an announcement in Budget 2018. These new rules mean that clients (not contractors themselves) will be responsible for determining the employment status of contractors.
A consultation on how the private sector changes will be rolled out was published on 5th March 2019 - read our summary here.
- April 2020 Private sector IR35 reform - what happens now?
- What clients can do to prepare in advance of April 2020.
- What contractors can do to mitigate against the IR35 changes
- IR35 off-payroll changes - our essential FAQs
Get started with our IR35 guides
Barclays has told its contract workforce that it will no longer engage contractors who operate via limited companies, as a consequence of the forthcoming private sector IR35 off-payroll changes next April. Other firms are taking similar measures.
If you decide to cease trading via your limited company following the private sector IR35 changes in April 2020, you should take great care when chosing the best way to exit, as well as the alternative ways to operate as a contractor.
There is a huge amount of information available about IR35 and how to protect yourself. But what happens if you are actually selected for an investigation? How does an IR35 enquiry work and what should you expect if HMRC has lined you up as a target?
A confirmation of arrangements letter from your client can be used to back-up your IR35 position with HMRC should it be challenged, as it confirms how you perform your contract duties in reality.
Around 1,500 GlaxoSmithKline contractors have been sent identical letters from HMRC, accusing them of being ‘disguised employees’ – and therefore subject to the IR35 rules.
If your contract work is caught by IR35, your tax bill will rise considerably. Here, we use our IR35 calculator to work out the financial impact on contractors earning between £250 and £1000 per day.
The IR35 ‘off-payroll’ rules will be extended to the private sector from April 2020 onwards, directly affecting a large number of contractors. What exactly does this mean, and what can contractors and clients do to prepare in advance?
When end-clients determine the IR35 status of contractors in the private sector from April 2020 onwards, they are tasked with taking ‘reasonable care’ when making employment status decisions.
If you are caught by the off-payroll IR35 rules, you may decide that there is no point keeping your limited company active. However, this isn’t necessarily the case, as a leading accountant explains.