Half of the contractors plan to leave clients in the next eight weeks due to changes to the IR35 ‘off-payroll’ rules. The UK’s IR35 legislation ensures that contractors pay the same tax and National Insurance contributions as an equivalent employee.
New IR35 changes will be implemented in April 2020 for private sector contractors that will transfer responsibility from contractors to large and medium companies to assess IR35.
Government Updates – February 2020
On 7th February, HMRC announced a significant change in the application of the changes to the off-payroll working rules. The new rules will now apply only to payments that are made for services which are provided on or after 6 April 2020.
Here are the IR35 changes that have been made:
HMRC has clarified the application of the rules ahead of the Government’s review which is due to conclude in February.
- The ongoing review of IR35 change implementation, which the government aims to conclude in mid-February 2020. This will determine if any further steps can be taken. This will separate review which will assess whether any additional support is needed to ensure that the self-employed, who are not within the scope of IR35 rules, are not impacted.
- As the Budget will not take place until 11 March 2020, the subsequent Finance Bill containing the legislation for these rules will only be published a little over three weeks before they are due to take effect.
- HMRC using the first 12 months to continue to educate, rather than seek to punish businesses. Who has not been able to get their house in order
IR35 – Off-Payroll Working Rules April 2020:
The off-payroll working rules will now only apply to payments made for services provided on or after 6 April 2020. The rules would have applied to any payments made after 6 April 2020.
Although the formal publication of the government’s review isn’t expected to conclude until later this month. HMRC felt that it should take action early and announce this change to the rules to give businesses.
Do I get employment rights if I am “inside IR35”?
Should you wish to continue operating as an “inside IR35” contractor. You will not benefit from any “employee rights” such as holiday pay, sick pay, pension contributions, dismissal rights and more. You may receive these benefits through your employment in your PSC.
If your assignment falls ”inside IR35” it is likely that you are not in the business of your own accounts. If you opt to engage via an umbrella company, you are an employee of the umbrella company. Therefore, you will benefit from employment rights and AWR will apply.
How We Can Help:
At Payroll Village we keep all our candidates and clients updated on our payroll services. If you would like to discuss further details regarding umbrella services and contractors on our payroll services or the update that we have given you, contact us on 0207 537 6631.