IR35/Off-Payroll Tax Guidance

IR35 is a term used to describe two sets of tax legislation introduced to tackle the problem of ‘deemed employment’. This is where organisations engage workers on a self-employed basis, usually through an intermediary such as a limited company, rather than on an employment contract so they become “deemed” or "disguised" employees.

Despite being in force since April 2000, IR35 has been heavily criticised as being poorly conceived, badly implemented and causing unnecessary hardship for genuine small businesses. This is why the Government is replacing the original IR35 legislation with the new Off-Payroll Tax, which was initially introduced into the public sector in April 2017, and will be extended to the private sector from April 2021.

The Off-Payroll working rules can 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. These rules will make sure that workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same tax and National Insurance contributions as employees.

Under these new rules the client, as the organisation receiving the services of a contractor, will be responsible for determining whether the Off-Payroll working rules apply.

Sounds complicated?

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Whether you are hiring freelancers and want to ensure that you take all correct steps when hiring your workforce or you are contractor looking to ensure that you are compliant with the latest legislation, a call to Barnstone can guide you through these rules and regulations.

We can also provide you with advice regarding Business Legal protection and Professional Indemnity insurances so regardless of your Business model, you can rest assured that Barnstone Accountancy will always help to protect you and your Business.

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