IR35 - what you need to know
- The off-payroll rules which already apply in the public sector will also apply in the private sector from 6 April 2020. The rules will apply to all payments made on or after that date.
- The IR35 rules themselves are not changing but the administration of IR35 is.
- You can view the draft legislation here and the government policy paper here. See also HMRC’s initial guidance.
- A technical consultation on the draft legislation has closed and we await the final legislation. However the budget has been postponed to allow for the general election and so we do not know at this stage when to expect final legislation. Meanwhile we have updated our guidance on the changes.
- There is an exemption for clients which are small companies. This exemption does not apply to agencies which are also small companies.
- We are currently updating the template contracts but we cannot release these until we have the final legislation.
Tax avoidance schemes:
In anticipation of the changes some intermediaries may approach recruitment businesses with ‘solutions’ to the changes. Some will be legitimate, others won’t be. HMRC have issued a number of Spotlights about schemes used to reduce temporary workers’/ contractors’ tax and NICs and which HMRC considers do not work. These include paying contractors via loan (now subject to the loan charge), annuity and loyalty points for advertising the contractor’s services on a jobs board. When engaging with any intermediary, members should fully understand the arrangements used to pay those temporary workers/ contractors. Please note that HMRC do not endorse any “solutions”, companies or assessment tools.
IR35 support for the 2020 changes
IR35 guide for Clients
IR35 Guide for members
IR35 guide for Contractors
REC's response to the IR35 consultation - May 2019
Quick summary of IR35 draft legislation released
Tax Guide for Recruiters - 3rd Edition (May 2019)
Resources you may be interested in