The Government delayed introducing the new off-payroll (IR35) rules in the private sector by a year because of Covid-19. The rules will be introduced in April 2021.
IR35 refers to the rules that HMRC uses to work out whether a contractor is genuinely self-employed for the purposes of paying tax.
HMRC doesn’t want contractors who are essentially employees to enjoy the same tax efficiency as those who are genuinely self-employed and the tax authority also doesn’t want employers enjoying the advantage of not paying employers’ National Insurance contributions or giving employee benefits.
The April 2021 change means that medium0sized and large businesses who employ contractors will now be responsible for working out a contractor’s employment status, rather than a contractor themselves. They’ll also be responsible if they get the decision wrong and get any penalties!
These changes have been frowned upon by many individuals and employers but with the change of another delay unlikely, preparation is now key!
For more information, please visit https://www.gov.uk/topic/business-tax/ir35 or contact us directly