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A breakdown of the IR35 reform

Mon 2nd Mar 2020

Set to be introduced on 6th April the reforms will be the biggest change seen that impact contractors across the private sector. The private sector IR35 rules will be in line with the public sector so that contractors and freelancers will no longer be responsible for determining how they should be taxed based on the work they do. Instead the responsibility shifts to the end client who must determine if the contract falls inside of IR35 or outside.

HMRC is introducing these stricter rules to capture those working through a limited company purely to reduce the tax and NICs they pay.

Official statement from HMRC: “The [IR35] rules make sure that workers, who would [be] an employee if they were providing their services directly to the client, pay broadly the same tax andNICs as employees.”

The new IR35 rules are going to apply to all contractors who work through their own limited company or personal service company and engage with any public sector organisation or medium to large private sector company. Medium to large charities will also fall into these changes.

If you are deemed inside IR35 it still means you are working for yourself, it just means that your tax and NICs will be deducted from your fees and paid to HMRC. Employment status can change from contract to contract so if you are caught in IR35 it doesn’t mean you always will be.

If you have questions regarding IR35, we have partnered up with IR35 specialists Larsen Howie. We will be working together to ensure both agencies and contractors are covered for all areas when it comes to IR35.

Services available include:

IR35 Contract Reviews

IR35 Working Practices Review

IR35 Tax Investigation insurance

Contractor Tax

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