Changes to the off-payroll working rules known as IR35 will go ahead from 6 April 2020 according to a Treasury report published on 27 February.
The Treasury had conducted a review of the changes following significant protests from those affected. The changes aim to ensure that someone working like an employee but through a company, pays similar levels of tax to other employees. The rules are known as IR35 and do not apply to the self employed. The Treasury has announced that it will go ahead with the changes as planned.
So, from April 2020, if you are a contractor, determining your employment status will shift from yourself to the organisation engaging you. The public sector adopted this rule in April 2017, but from 6 April 2020, medium and large organisations in the private and third sectors will take on the responsibility for determining the employment status of contractors they engage.
The Government is keen to point out that it has been taking steps to help organisations and contractors prepare, publishing guidance in April and August 2019 on how to prepare for the change.
You can find the information issued using the links below:
- Prepare for the changes to off-payroll working rules (IR35)
- Understanding off-payroll working
- Contractor Fact Sheet
- Government Off-Payroll working rules: communication Resources
The report goes on to list a number of changes designed to address some of the concerns raised and aid implementation of the reform.
“Customers will not have to pay penalties for errors relating to off-payroll in the first year, except in cases of deliberate non-compliance.”
” HMRC are confirming their previous commitment that information resulting from changes to the rules will not be used to open new investigations into Personal Service Companies for tax years prior to 6 April 2020, unless there is reason to suspect fraud or criminal behaviour”.
Craig Simpson comments:
““The Government are pressing ahead with the off-payroll worker rules but with a soft landing. It was always unlikely that the rules would be delayed as a result of the review but it is good to see HMRC listening to the concerns raised”
Mean while, the The House of Lords Finance Bill Sub Committee is still conducting an independent enquiry into the impact assessment of the planned changes. It called for submissions by 25 February and will report its findings to the House of Lords.
If you are unsure whether you are affected, or how, get in touch. We can help.