IR35 has been around for almost 20 years, but 2021 has seen it back in the spotlight with changes to the legislation being introduced this year. There has never been a more important time to know where you or your contractors fit within the new rules, so let us help make sure you are prepared.
Implemented by the UK government to ensure contractors pay the same tax and National Insurance Contributions (NIC) as an equivalent employee would, IR35 aims to tackle tax avoidance in workers, and the companies who employ them.
What changes have been made to IR35?
- After only affecting the public sector previously, IR35 has now been extended to cover the private sector too
- It only affects medium to large scale businesses. Small organisations will be exempt
- The liability and responsibility will sit equally with contractors and end user clients which means that any unpaid tax can be collected from both if an error has been made
- Organisations will only need to determine whether rules apply for contracts they plan to continue beyond April 2021.
How can I prepare for the changes?
If you engage with self-employed consultants or contractors, you will need to prepare for the changes. However, it is not as scary as it seems.
Start by identifying and reviewing your current contracts with your consultants and contractors, and ensure the terms of engagement are clear and accurate. Take some time to consider how services are currently delivered and by who, and if you could potentially change contractors or consultants into employees.
You have the opportunity to review what you have in place now and how you can operate in this new IR35 era. Now is the time to identify the issue and address them before HMRC do and you expose your business to unnecessary risk.
Here at Swinton Accountants we can provide advice and clarity on all your contract needs, making sure you understand and apply best practice when it comes to IR35. Call us now and let’s talk.
