From 6th April 2020 HMRC are introducing new rules for off-payroll working.
Currently, if you provide your services to a client through an intermediary, e.g. a company, (often referred to as a personal service company PSC), and you would be an employee if you worked directly for the client, the off-payroll ( IR35 ) rules apply.
This means you are responsible for PAYE tax and NI on the fees you receive from the client.
What are the changes?
From 6th April 2020, medium and large-sized organisations will be responsible for deciding if IR35 rules apply and if so they will deduct PAYE tax and NI before paying your fees.
Are you affected?
Those affected are:
- Contractors who work through an intermediary, e.g. your own limited company, and
- You provide your services to public sector organisations or medium or large-sized organisations outside of the public sector.
Do you need to take action?
HMRC advises that, as a contractor, you don’t need to take any action before April. However, it also advises that if you think you may be affected by the new rules you should request a Status Determination Statement from each of your clients. This Statement will advise if your client plans to apply the new rules and their reasons for doing so.
HMRC’s new factsheet summarises what you can expect and provides useful links. Click here to find out more.
Your rights to challenge the statement.
If you disagree with your client’s determination, you have the right to formally challenge it. Your client will have 45 days to respond. This means time is running out if you need to negotiate working terms before 6th April 2020.
Our recommendation to you.
Ask for a “Status Determination Statement” from all of your clients where IR35 rules apply. This will inform you whether they’ll deduct PAYE tax and NI from your fees from 6th April 2020.