We are now a month into the new IR35 reform, but you may still have some questions such as ‘What is IR35?’ ‘What does inside IR35 mean?” “How does IR35 affect me?”.
IR35 legislation can be confusing to understand and so we’ve answered the most commonly asked questions below.
What is IR35? Who does IR35 apply to?
The IR35 legislation changes came into force in the private sector on April 6th of this year, meaning contractors who provide their services through their own limited company, or another type of intermediary to the client, will now pay tax and National Insurance contributions differently.
Introduced in 2000, the IR35 regulation was brought about to assess, for the purposes of paying tax, whether a contractor was genuinely operating as a contractor rather than what they deemed a ‘disguised’ employee. If the contractor is deemed to be a ‘disguised employee’ then IR35 rules will mean they now pay broadly the same Income Tax and National Insurance contributions as employees.
Since 2000, this has been amended a number of times by HMRC, and new changes to IR35 will now also apply to the private and third sector.
What do the IR35 changes mean for our clients and candidates?
If a contractor sits inside IR35 (i.e. they would be seen as an employee if they were providing their services directly to the client) then off-payroll working rules will apply, and the contractor will be deemed an employee for tax purposes, Income Tax and National Insurance contributions must be paid to HMRC, alongside, if applicable, the Apprenticeship Levy.
What are the new IR35 rules in 2021?
Since the roll out of new procedures relating to off-payroll working rules was delayed last year, HMRC have made further changes to the legislation, especially around the process of determining the status of the role. It is no longer up to the contractor to provide this determination, but rather but the end-user with the responsibility of unpaid taxes falling on them.
Hiring under the new off-payroll IR35 rules
With the new changes to off-payroll across the private and third sector, it is particularly important that clients and candidates keep informed about their respective responsibilities.
If you are concerned about potential implications to yourself or your business as a result of IR35, VANRATH can help!! Our recruitment specialists are highly knowledgeable in the area and have also partnered up with leading IR35 specialists Qdos to ensure we can provide you with full and extensive IR35 support. Contact us on 02890 330 250.