The IR35 ‘off-payroll’ rules will be extended to the private sector from April 2021 onwards, directly affecting a large number of contractors. What exactly does this mean, and what should contractors and clients do to comply with the new legislation?
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 2021
The 'off-payroll' addition to the existing IR35 rules was rolled out across the publc sector in April 2017. The rules will also hit private sector businesses from April 2021. The planned rollout was deferred from April 2020 due to the COVID-19 crisis. These new rules mean that clients (not contractors themselves) will be responsible for determining the employment status of contractors.
Here are some of our most-read articles:
- April 2020 (now 2021) Private sector IR35 reform - what happens now?
- What clients can do to prepare in advance of April 2020 (now 2021).
- What contractors can do to mitigate against the IR35 changes
- IR35 off-payroll changes - our essential FAQs
Get started with our IR35 guides
- Start off with our overview of IR35 for a concise guide to the legislation.
- Expert FAQ - Are you 'inside' or 'outside' IR35?
- Try our IR35 tax calculator to find out the financial cost if you are caught.
- Why you should consider taking out IR35 insurance.
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With the private sector off-payroll changes set to go ahead in April 2020, some ‘outside IR35’ contractors may be forced to work ‘inside IR35’ if their clients are reluctant to take on the potential risks of making incorrect employment status decisions – at least for the time being.
The Treasury has announced a review into the ‘off payroll’ (IR35) rules, seemingly aimed at making the private sector rollout as smooth as possible, rather than as a precursor to making much-needed changes to the underlying legislation.
For a relatively small outlay, a professional contract review service will analyse your contracts to ensure that you comply with IR35 – both in terms of your contract wording, but also the ‘working practices’ you undertake at your client site.
A number of high profile clients will stop engaging limited company contractors in 2020 due to the private sector off-payroll changes. What should you do if you are affected? We ask a well-known IR35 expert.
To protect yourself against IR35, you need to be sure that the wording of your contracts (and the way you actually carry out your contract work for the client) show that you are genuinely ‘self employed’. Here we show where you can download a sample contract template.
This week, HMRC has issued a new ‘issue briefing’ on the forthcoming off-payroll (IR35) changes. The aim of the publication is to ‘help organisations prepare’. With the help of an industry expert, we do some fact-checking on the statements and claims made by the taxman.
When end-clients determine the IR35 status of contractors in the private sector from April 2021 onwards, they are tasked with taking ‘reasonable care’ when making employment status decisions.
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.