New IR35 off-payroll working rules are now in effect

New IR35 off-payroll working rules are now in effect

From today, Tuesday 6th April 2021, the new IR35 off-payroll working rules will apply if a worker (sometimes known as a contractor) provides their services through their own limited company or another type of intermediary to the client.

An intermediary will usually be the worker’s own personal service company, but could also be any of the following:

– a partnership
– a personal service company
– an individual

The rules make sure that workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same Income Tax and National Insurance contributions as employees.

The client is the organisation who is or will be receiving the services of a contractor. They may also be known as the engager, hirer or end client. The client will be responsible for determining if the off-payroll working rules apply.

Who the rules apply to

You may be affected by these rules if you are:

– a worker who provides their services through their intermediary
– a client who receives services from a worker through their intermediary
– an agency providing workers’ services through their intermediary

If the rules apply, Income Tax and employee National Insurance contributions must be deducted from fees and paid to HMRC. In addition, employer National Insurance contributions and Apprenticeship Levy, if applicable, must also be paid to HMRC.

You can use the Check Employment Status for Tax service to help you decide if the off-payroll working rules apply.

All public sector authorities and medium and large-sized private sector clients are responsible for deciding if the rules apply. If a worker provides services to a small client in the private sector, the worker’s intermediary will remain responsible for deciding the worker’s employment status and if the rules apply.

Click here to find out more.

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