Despite the April 2020 deadline being delayed, IR35 in the private sector looms again and will come into effect on April 6th 2021. Therefore it's important that both contractors and end clients start preparing now so they are not caught out by the upcoming changes.
IR35 is HMRC tax legislation - to ensure that LTD company contractors are not simply operating as a self-employed contractor in order to avoid paying employee level tax and NI. Currently, contractors make their own status determinations. However, one of the main changes as of April 2021, is that the responsibility for determining this status will move from yourself to your end client.
If deemed inside, payments received by the PSC would be subject to tax and National Insurance (NI) as if the individual were employed by the end client. The resulting tax liability would fall upon the contractor. Contractors deemed 'in scope' will be required (in most cases) to operate either via PAYE or via umbrella companies PAYE models.
What happens now?
Some clients may have already informed their contractor populations of their IR35 processes and timescales, with others expected to do so over the coming weeks and months. Please rest assured that our IR35 team is advising clients to action this sooner rather than later.
This assessment process will include a review of your role to determine whether it is deemed as inside or outside of IR35, which will be communicated to you in a status determination statement (SDS) and include your clients’ reasons for reaching this conclusion.
Whatever this determination may be, we are on hand to help you understand your options. If you are deemed to be inside of IR35, then this will require you to alter the way you provide your services to the end client, either via a PAYE contract with Morson or a compliant umbrella PAYE solution.
Every organisation has a duty of care to their workers, and against the backdrop of COVID-19, it has never been more important to prioritise talent. Should any client, however, fail to inform either you or Morson of their SDS ahead of the April deadline, we must assume that you fall inside of IR35 and ultimately safeguard the interests of everyone involved. Our IR35 team remains on hand to guide you through these changes.
We remain fully committed to supporting our contractors in what is an already challenging landscape and have implemented several communication channels to assist you in moving forward:
Visit our IR35 Contractor Support Hub to access the latest support and insight
Contact our IR35 support team on IR35@morson.com or 0161 786 2377
Check Umbrella company options with our approved Umbrella supplier list
Are you an end client? We're here for you too.
To support you in the lead up to (and following) the April 2021 off-payroll changes, our experts are on hand to help businesses navigate the reforms.
From full reviews of your contractual workforce to practical and commercial IR35 solutions including a fixed price statement of work, we provide a suite of robust solutions tailored to your organisation to help shape an effective IR35 strategy to remove the burden of IR35, minimise risks and costs.
Our team of experts, who bring a combined 40 years of experience, have supported private and public sector organisations to comply with IR35 legislation since it was introduced in 2000. This experience proves invaluable to our clients and their operations.
Find out more in our IR35 Solutions Hub here.