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IR35 ‘off-payroll’ rules to be extended into private sector

By Charlie Catton

​From 6 April 2020 onwards, IR35 ‘off-payroll’ rules will be extended to the private sector.

The changes to HMRC’s Intermediaries Legislation (IR35) follow similar ‘off-payroll’ rules for public sector workers that were introduced in 2017.

As a contractor, it is important that candidates are aware of their responsibilities under the new rules.

Current rules

Currently, contractors are responsible for determining their employment status under the IR35 rules and paying the relevant tax and National Insurance.

From 6 April 2020 onwards

Medium and large sized private sector businesses (end-user) hiring contractors through an intermediary (usually a personal service company ‘PSC’) will determine whether IR35 will apply to each contractor working arrangement.

This takes the determination away from the contractor (worker). Furthermore, those workers who fall inside of IR35 will be required to have PAYE and National Insurance Contributions (NICs) deducted at source from their income.

The ‘fee-payer, (typically a recruitment agency, umbrella company or independent PSC) will become your ‘deemed employer’ and will be responsible for deducting the correct amount of employees’ NICs and income tax from the contractor’s pay, as well as paying employers’ NICs.

How will you know if a role is ‘inside’ IR35?

Sanctuary Personnel will be clear within its communications with you about whether a job role is expected to be ‘inside’ IR35 or not. Before starting your role, the business (end-user) will assess your status to determine whether the working arrangement is inside IR35.

Steps to take to be prepared

As a recruitment company, we cannot legally provide our candidates with financial advice. You will need to speak to your financial advisor. We can, however, let you know what the rules mean for upcoming working arrangements.

We're here to answer your questions

We are hosting a free online webinar on Wednesday 12th February from 6-7pm. This is your opportunity to ask us your questions; you can register online and pre-submit your questions.