What is IR35?
It’s been over a year since the off payroll working rules (IR35) changed in the private and voluntary sectors.
Some organisations who engage contractors in those sectors who didn’t need to apply the rules for 2021-22 as they didn’t meet the size conditions — but who do now.
It is advisable to check the Employment Status Manual, which can be found here, Employment Status Manual - HMRC internal manual - GOV.UK (www.gov.uk), for whether the rules apply to you every year. This is particularly important if you have:
- become a newly formed business
- been bought by another organisation
- grown in size over the last few years
If you are new to the rules, you may find it useful to read through the steps needed to implement off-payroll working rules, which make sure that a worker (sometimes known as a contractor) pays broadly the same Income Tax and National Insurance as an employee would.
The rules apply if the worker who provides services to a client through their own intermediary would have been an employee if they were providing their services directly to that client.
You can find more information on the HMRC website, Understanding Off-Payroll Working IR35
If you are a contractor working through your own limited company, often known as a Personal Service Company (PSC), or other intermediary, who provide services to a small client organisation in the private and voluntary sectors are still responsible for considering and applying the rules. You may want to check that your client is a small organisation in the private or voluntary sectors.
You can check the status of a worker using HMRC Check Employment Status for Tax tool.
If you need help with anything covered in this article or you are looking to outsource your payroll, contact us to find out how we can help you.
