Friday 25th October 2019
From 6 April 2020, changes to tax legislation regulating off-payroll working (commonly known as IR35) will come into effect. The new rules require larger private sector businesses to deduct income tax and national insurance contributions (NICs) via payroll from fees for services paid to an “intermediary” (usually a company or partnership), where the individual providing services would otherwise be regarded as an employee for tax purposes.
This is a change from the current position under which the intermediary (rather than the business engaging it) is liable for tax.
Over the past few years, there has been an increase in the number of contractors supplying services to businesses and the sums paid under these agreements can be significant. Businesses will need to take advice on dealing with the changes and their consequences.
Preparing for 6 April 2020
The first stage is to identify any off-payroll workers supplying services to the business and determine whether, if the intermediary did not exist, that worker would be an employee of the business for tax purposes. Once any such workers have been identified, the business will need to inform both the intermediary and the worker.
There are a number of factors used to determine employment status and you’ll need to take account of what actually happens in practice, as well as what the contract provides for. When advising businesses as to how they’ll be impacted by IR35, you’ll need to think about:
For a more in-depth analysis and practical advice on preparing clients for the new regime don’t miss our new full-day course IR35: Off-Payroll Working from 2020.
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