On 6 April 2021 changes will be made to the off-payroll working rules (otherwise known as IR35).
IR35 is designed to crack down on "disguised employees". It will apply if an individual provides a personal service via an intermediary (such as a personal service company (PSC)) but they would be classed as an employee for tax purposes if they were engaged directly.
Organisations engaging individuals via intermediaries will need to assess if there is a deemed employment relationship for tax purposes. If IR35 applies to the engagement, the individual is treated as a deemed employee for tax purposes and income tax and national insurance contributions must be deducted through PAYE.
All but small private sector organisations will be affected by the changes, including those in housing, charity, care sectors.
You need to understand the full implications of the new rules for your organisation. Identify how many PSCs you engage, in which part of the business they sit and whether you engage them directly or via an agency. Design and implement robust systems for assessing and communicating IR35 status, and set up a dispute process. Make sure HR, finance, procurement and payroll teams are involved.
How we can help
We can provide the support and advice you require to manage the introduction of these changes. We can also offer the following for fixed fees:
- A meeting to discuss strategic advice on IR35. This might involve considering some of your engagements where the IR35 status isn't clear cut
- A virtual training session
- A simple guidance note introducing the IR35 rules aimed at managers
- A checklist of factors to consider when assessing if an engagement falls within IR35
- A template Status Determination Statement
- A template contract with a PSC