What is IR35 and how does it affect contractors?
With some upcoming changes to the IR35 legislation within the private sector, Chart Accountancy explore how these reforms may affect contractors and freelancers throughout the country.
IR35 is a form of tax legislation that targets those who provide services to their clients via their own limited company, specifically contractors. The legislation prevents those who are legally acting as employees from avoiding PAYE and NIC payments they should be making – often referred to as ‘disguised employees’.
While the existing IR35 legislation can sometimes be unclear, there are more changes set to take place from 6th April 2020 in terms of who is affected by the regulations.
The IR35 changes within the private sector.
With a detailed report on when the new rules will be implemented set be to announced in Spring, we still have little detail on what changes are going to be made to IR35 in the private sector.
It is also worth noting that the IR35 changes in the private sector will only affect medium to large sized businesses, with small businesses (fewer than 50 employees) not being considered. However, it is presumed that the new legislation will be similar to the IR35 public sector changes.
For instance, if a business utilises workers via a Personal Service Company (PSC) or any other intermediary, such as an LLP, the new IR35 regulations will force businesses to review their contracts with these companies to determine if they should in fact be treating them as an employee for tax purposes.
Even if the workers have been hired via a 3rd party company, the engager may still be liable to make NIC and PAYE payments throughout the duration of their contract. They must also account for employers NIC and may also be affected in terms of the apprenticeship levy.
One of the main concerns for those that work with PSCs is the possibility of increasing costs. For instance, those PSCs, or their own providers, may look to increase their costings to cover the contributions they will be required to make following the changes.
We will know more on the proposed changes to legislation after the announcement in Spring and a further statement of when these revisions will be implemented at the end of summer 2019.
How can Chart Accountancy assist with IR35 changes?
If you are unsure whether these new IR35 reforms will affect your business and how you operate, get in touch with our friendly team.
As specialists in contractor and freelancer accounting, we have a solid understanding of the current IR35 legislation and will be poised to advise on the new changes within the coming months. We understand that these alternations may be confusing to understand, so don’t handle this all on your own.
Our team of qualified accountants have years of experience in working within legislations such as these, therefore we are positioned to provide advice on a huge range of topics that may affect your business as a contractor or freelancer.
We are also extremely transparent with our pricing, with all our costings listed on our packages page. There are no hidden fees when working with us, we are simply a reliable accountancy partner for your growing business.
Get in touch
For more information on the IR35 changes within the private sector and how they may affect your business, do not hesitate to get in touch with the Chart Accountancy team.
We have extensive experience in accounting for both contractors and limited companies, so reach out to find out more about how we can assist you.
Call our team on 0333 772 7753 or email [email protected] and we will be in touch as soon as we can.