Changes to IR35 – The Off Payroll Working Rules

Dixcart Tax Manager, Sarah Gardner, explains the upcoming changes to IR35 – the off-payroll working rules, coming into force on the 6th April 2021.

IR35 was first introduced in April 2000 – the aim to stop individuals working for a client company, paying less tax by invoicing that client through an intermediary company that they own.

The changes in April 2021 will mean that the responsibility for deciding if a contract is within IR35 will fall with the end client, no longer with the intermediary company.

What do the changes mean?

  • The end client will be responsible for accessing whether the contract is within IR35 or not, and it will be them that pay the tax, national insurance deductions and employee national insurance contributions.
  • The rules will apply to private sector companies that meet two or more of the following criteria:
    • Annual turnover of more than £10.2 million,
    • Balance sheet total of more than £5.1 million, or
    • Have more than 50 employees.
  • These changes do not apply to smaller clients.
  • Please note all companies are considered small in their first year of operation.

Our specialist tax advice and employment law teams can help you with the next steps, from reviewing all of your current contractor relationships, and assisting with drafting or re-writing relevant contracts, and advising on the penalties that may apply, going forward. Please get in touch:

The data contained within this document is for general information only. No responsibility can be accepted for inaccuracies. Readers are also advised that the law and practice may change from time to time. This document is provided for information purposes only and does not constitute accounting, legal or tax advice. Professional advice should be obtained before taking or refraining from any action as a result of the contents of this document.