The off-payroll working rules (IR35) apply if a worker provides their services through their own Limited/Personal Service Company (PSC), but would be classed as an employee if they were contracted directly. Before 2017, the responsibility for determining employment status for tax fell to the worker’s PSC.
In 2017, the government changed the off-payroll working rules to shift responsibility for determining employment status from the worker’s PSC to the organisation they work for.
From 6 April 2020 in addition to all public sector authorities, medium and large-sized private sector companies will now be responsible for deciding if the rules apply.
There will be no change to workers that provide services to a small client in the private sector, the worker’s PSC will remain responsible for deciding the worker’s employment status and if the rules apply.
In reality the changes only affect large businesses. So if you do not meet two of the following three descriptions then the new rules simply do not apply:
- You have an annual turnover of more than £10.2 million
- You have a balance sheet total of more than £5.1 million
- You have more than 50 employees
EEBS can quickly review current arrangements between a contractor and sub-contractor and potentially provide a bespoke and compliant solution, contact us for advice today at firstname.lastname@example.org or call 01245 493832.
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