- Are you ready for the IR35 off-payroll worker changes?
Are you ready for the IR35 off-payroll worker changes?
Are you ready for the IR35 off-payroll worker changes?5th February 2020 - Published by
At our HR Breakfast Club in September, we discussed the upcoming changes to the IR35 off-payroll worker rules. With April now around the corner, we wanted to remind employers about their changing responsibilities.
What is changing?
If you engage contractors or off-payroll workers, your contract may well be with a personal service company. IR35 tax legislation was introduced in April 2000 with the aim of taxing “disguised employees” at a rate similar to that of employment. When the legislation was originally introduced, the responsibility for determining the correct employment status of a worker lay with the contractor.
In April 2017, HMRC introduced a reform in the public sector under which it became the responsibility of the public authority to determine the contractor’s status. From 6th April 2020, that reform will extend to the private sector, unless your business is exempt as a small company.
Am I exempt?
The change in legislation does not apply to companies that meet two of the following conditions:
1. Turnover of £10.2m or less;
2. £5.1m or less on your balance sheet;
3. Not more than 50 employees.
What are the penalties for non-compliance?
Penalties for breach include fines of up to 100% of the unpaid tax.
What should I do now?
If you are not a small company and you engage contractors (particularly contractors who might be seen as employees if they did not contract through a company), now is the time to assess the status of those individuals.
We have been helping clients carry out assessments of their contractor and off-payroll worker relationships in order to ensure they do not fall foul of the new legislation. Please contact a member of the team to find out more.