Next month, new rules will apply, extending tax legislation IR35 into the private sector. These changes were due to go ahead last April, but were postponed due to Covid-19.
This extension of the rules means that workers/contractors who provide their services through their own limited company or another type of intermediary will pay the same tax and National Insurance contributions as employees.
At Proactive Personnel, our teams have been busy working with our relevant clients and candidates to make sure we are prepared for these changes.
IR35: The Basics
The government is extending off-payroll rules, which have applied in the public sector since April 2017, into the private sector. The new rules will apply to payments made to intermediaries such as Personal Service Companies (PSCs). Importantly, the tests for IR35 status are not changing but the responsibilities for making the IR35 status decision and deducting tax and National Insurance are.
This means that from 6 April 2021, the PSC will no longer be responsible for managing IR35. Instead, the client must assess the IR35 status of each engagement, and if the client finds that the engagement is ‘inside IR35’, the fee-payer must deduct tax and national insurance before paying the PSC.
The new rules will apply to payments made to PSCs for work done on or after 6 April 2021.
(Recruitment & Employment Confederation 2021)
How Have Proactive Personnel Responded to IR35?
At Proactive Personnel, we have provided training (supported by guidance from the REC) to all Consultants who’s candidates and clients will be affected by the changes, largely our Transport Department.
Our teams have been on call to support the companies and candidates we work with in finding the right solutions, in time for the legislation extension in April.
“IR35 moving into the private sector will have an impact on the industries we supply and in particular our transport departments. As a business, we have been in discussions with our clients and drivers to keep everyone informed and to try to find the best solution for us in the market right now. Proactive Personnel only deal with FSCA approved Intermediary payroll companies so we feel we are able to offer an internal PAYE route or the intermediaries for those drivers unable to use their PSCs after the 6th April. For those clients who are exempt from the new regulations, we will continue to use PSCs but under more stringent procedures for due diligence.” Kerry Chapman, Regional Director, Head of Operations & Compliance)
“Proactive Personnel understands that this is the biggest change to affect the transport industry since the introduction of the Drivers CPC and although we are not able to give tax advice or guidance, we can give advice in regards to the options of payment we can offer for the contracts we currently supply. Proactive Personnel wishes to retain all our HGV drivers as valued workers and we hope that we can assist in making this a smooth transition for all concerned parties.” Zak Williams, Regional Director
HMRC have released several publications in regards to the off-payroll working (IR35) and for more information, we suggest you look at the following link that will give in-depth information, advice and guidance > www.gov.uk/topic/business-tax/ir35