IR35 – what you need to be aware of?
IR35 refers to the tax status of off-payroll workers. This is changing from 6 April 2020. From that date the engaging business not the individual will need to determine the tax status.
Who does this apply to?
All public sector organisations and medium and large private sector organisations.
How do you know if it applies?
If you meet 2 or more of the following:
- You have an annual turnover of more than £10.2 million
- You have a balance sheet total of more than £5.1 million
- You have more than 50 employees
Equally if you work as a self employed contractor it may well apply to you, depending who you are doing business with.
What do you need to do?
As an organisation engaging contractors you need to decide the employment status for each and every worker who is not an employee. You are liable for their tax and National Insurance until you tell the individual otherwise.
As a contractor – make sure the organisations you engage with have determined your status. They should notify you of their determination and the reasons.
How do you determine a workers status?
Luckily HMRC have launched a tool to help you – https://www.gov.uk/guidance/check-employment-status-for-tax This will give a determination HMRC will stand by.
Of course it is more complicated that this so if this affects your business contact us and we can carry out a full IR35 assessment and advise you on what you need to be doing to ensure you are compliant.