Nobody likes to talk about tax, but when it comes to IR35, it’s important that you understand the rules since they affect many of our locum criminal justice candidates.
IR35 is tax legislation. It is designed to combat tax avoidance by workers supplying their services to clients through an intermediary (such as a limited company) who would be an employee if the intermediary was not used. It was introduced to tackle the problem of ‘disguised employment’. This is where organisations engage workers on a self-employed basis, usually through an intermediary, rather than on an employment contract, so they become disguised employees.
On 6 April 2017, there was an important amendment to the IR35 rules for individuals providing services to the public sector through an intermediary. The new rules transferred the responsibility for deciding whether IR35 applies, from the intermediary, to the public sector receiving the service.
Who decides if a role is inside or outside IR35?
If the role is with a private sector client (out of scope) then the worker still decides.
If the role is with a public sector client, the public sector body (i.e. local authority or NHS Trust) receiving the service decides whether IR35 applies to the working arrangement. This is done on a case-by-case basis. The decision does not belong with Sanctuary.
The public body follows a set of guidelines in making their decision about each role. To summarise, IR35 applies if you are providing services to a client under circumstances that, if not for the involvement of the intermediary, would be viewed as employment. The length of contract is irrelevant.
To ensure transparency, all our jobs are clearly advertised as either being inside or outside of IR35.
If you are on a contract for services and are determined to be outside of IR35 you will be able to claim tax relief in the form of expenses and other items.
What action should I take?
If a role is within IR35, the relevant tax and National Insurance are withheld from payment to the intermediary and paid over to HMRC on their behalf. For Sanctuary Criminal Justice candidates this means you’ll either be paid through Sanctuary Personnel as PAYE, through a compliant PAYE Umbrella company or via Deemed Payments.
If your role is Outside IR35 or Out of Scope for the off payroll rules then your accountant will be best placed to advise you on the options available to you.
For more information on IR35, contact your Sanctuary consultant.