Here at Remedy, we appreciate it can be a challenge to keep up to date with legislation updates and also getting to grip with them to make sure you're compliant. This is why we help you make sense of the latest changes, such as the recent IR35 legislation amendments.
what is iR35?
If you are new to IR35 and wondering what it is and if it applies to you, it is the intermediaries legislation reference code used to describe two sets of tax legislation which form part of the Finance Act, with the specific design to combat tax avoidance from workers and those hiring them.
The Latest Changes
Contractors who continue to operate as a limited company will be liable to pay themselves as an employee of the limited company. This will mean they are also subject to Corporation Tax, National Insurance and PAYE deductions.
This means contractors when working for an agency or end client who may normally invoice directly as self-employed or as a director, will not be allowed to pay themselves a self-employed salary, dividends or offset expenses.
Who it applies to?
If you are a contractor, freelancer or consultant working independently without anyone in your own business with your own tools and equipment and providing services to multiple clients the rules may not be applicable to you.
However there are tools available through HMRC to determine your IR35 status but as with many of these tools they are not necessarily straight-forward and easy to use unless you have experience using them. It is best to discuss your options with an accounting professional to understand your IR35 status.
Am I compliant?
It is your responsibility to make sure you are compliant with IR35 legislation, this will also include recruitment agencies.
To understand if you can continue operating as a sole trader, freelancer or limited company owner, you need to understand Supervision, Direction and Control (SDC). SDC will determine your employment status.
For more information on SDC visit the HMRC website. If you do not fall within the aforementioned, it is likely you do not fall within IR35. If you do fall within in IR35 then it likely that you will be affected. This new legislation will come into effect in April 2021. Contractors must be IR35 compliant by this date.
This applies when someone else is overseeing another person carrying out the work, this is to ensure they are completing the work correctly and to the required standard.
This will require the person carrying out the work to be directed by another person to make sure they complete the work to a set of standard processes or instructions whilst also advising them along the way.
Control is when someone dictates the work a person does as well as how they perform the work. The controller can move the worker from task to task as priorities change and work evolves.
Learn more about iR35!
If you would like more information or to discuss your IR35 status, please don’t hesitate to contact a member of the Remedy team.