IR35 changes from 6 April
How the off-payroll working rules or IR35 rules are applied will change from 6 April 2021.
Before 6 April 2021, if you a contractor who provides services to a client
in the public sector, the client must decide your employment status
in the private sector, you must decide your own worker’s status
From 6 April 2021, all public sector clients and medium or large-sized private sector clients will be responsible for deciding your employment status. This includes some charities and third sector organisations.
If the off-payroll working rules apply, your contractor’s fees will be subject to tax and National Insurance contributions.
What the changes mean
If you provide services to a public sector client, or a medium or large-sized private sector client, your client:
should get an employment status determination completed, as well as provide reasons behind that determination
A contractor will be able to dispute the determination given to them if they disagree with it
Tax and National Insurance
Your client will now be responsible for deducting income tax and National Insurance from your fees and paying them to HMRC.
Your client can either pay you via:
a salary through your payroll - but do not deduct tax or National Insurance contributions
dividends - these do not need to be recorded on your worker’s Self Assessment
As the amounts have already been treated as employment income doing it this way will avoid any double payment of tax or National Insurance contributions.
What to do if you disagree with the determination
Your client must decide your employment status and if the off-payroll working rules apply. The client must then tell your worker their determination and the reasons for it.
If you disagree with the determination, you will need to confirm:
details of the employment status determination you disagree with
give reasons for disagreeing
keep copies of any records about disagreements
A disagreement can be raised until the last payment is made for your services.
Your client will have 45 days from the date of receiving your disagreement to respond. During that time, the client should continue to apply the rules in line with your original determination.
If the client agrees your determination has changed, the client will have to in writing:
give a new status determination to you
confirm which date the determination is valid from
