Starting a new business? Get 40% off our accountancy services for 3 months! 😀

x

If you’re a business owner or self-employed worker sheepishly avoiding eye contact with anybody who brings up IR35 in conversation, you aren’t alone. A survey carried out by Sullivan & Stanley consultancy revealed that 71% of UK businesses don’t know about the changes to IR35.

What’s happening with IR35 in 2020?

On 6th April 2020, legislation comes into force within the private sector to tackle what the taxman has dubbed ‘disguised employment’, targeting self-employed contractors and freelancers who are used so frequently by a company that they may as well be on the payroll system.

HMRC’s concern is that without IR35, off-payroll contractors who are hired as though they were staff are unfairly exempt from paying the same tax and National Insurance Contributions that their full-time counterparts are subject to, despite working in almost identical ways.

cis returns service
The rules were implemented within the public sector back in April 2017, and raised an impressive additional £550 million increase in Income Tax and National Insurance contributions in the first 12 months. As of the start of the new tax year, they will also be applied to private businesses where services are provided on or after 6 April 2020 (rather than when the payments are made).

Who is responsible for assessing if IR35 applies?

The responsibility for assessing a contractor’s IR35 status (and for deducting tax and NICs) depends on the end client, which means a public sector business and some private sector businesses are responsible for deciding a contractor’s employment status.

Check if the rules apply to your private business> 

How do I know if IR35 applies?

IR35 is a complex subject which requires everything be considered in order to make an assessment. Fortunately HMRC have very kindly provided an online tool so both workers and clients can check the tax status to see if IR35 applies.

HMRC have also indicated that they will uphold the results of the online tool, so get into the habit of:

A bit of a touchy subject

The topic of IR35 is causing quite a stir. Though opinions are split there are many identifying the problems which IR35 will pose for them. As far as contractors and freelancers, it’s the threat of lower income, with  the changes reportedly have the potential to reduce a worker’s net income by as much as 25%.

For companies (i.e. the end client), it’s the added pressure of adhering to extra government regulations and the likely prospect of increased costs as contractors inevitably put up their prices to cover the loss.

The Federation of Small Businesses has already urged the government to reconsider the plans amidst the uncertainty of Brexit, but so far plans are going ahead.

IR35 help video

Watch our video guide to IR35, or download our help sheet for more information.

If you’d like some more info about IR35, get in touch by calling 020 3355 4047 or emailing info@theaccountancy.co.uk and one of our friendly team of experts will get back to you.

About The Author

Stephanie Whalley

Serial snacker, compulsive cocktail sipper and full time wordsmith with a penchant for alliteration, all things marketing and pineapple on pizza.

More posts by this author
guest
0 Comments
Inline Feedbacks
View all comments

Read more posts...

June 2022 Client of the Month: Manea Kella

This month we spoke to Adrian Manea, architect and director at Manea Kella, a London based RIBA Chartered architecture and interior design…

Read More

Succession Planning for Business Owners: What Comes Next?

When you own a business, it’s extremely normal to feel like you’re surviving one day to the next – ‘winging it’, as…

Read More

The Accountancy Partnership – Our Positive Reviews

Here at The Accountancy Partnership, we’re proud of our customer reviews The reviews we receive from our customers show how hard we…

Read More
Back to Blog...

Confirm Transactions

The number of monthly transactions you have entered based on your turnover seem high. A transaction is one bookkeeping entry such as a sale, purchase, payment or receipt. Are you sure this is correct?

Yes, submit my quote
No, let me change it

Please contact our sales team if you’re unsure

VAT Returns

It is unlikely you will need this service, unless you are voluntarily registered for VAT.

Are you sure this is correct?

Yes, the business is VAT registered
No, let me change it

Call us on 020 3355 4047 if you’re not sure.

Bookkeeping

You only need this service if you want us to complete the bookkeeping on your behalf.

Would you prefer to complete your own bookkeeping?

Yes
No

Call us on 020 3355 4047 if you’re not sure.