On Thursday 11th July 2019, the government finally published its draft legislation into off-payroll working in the private sector. The changes are due to be implemented from April 2020. 

Key points 

The key points to take from the draft legislation are as follows: 
From April 2020, private sector clients will be responsible for checking contractors’ off-payroll (IR35) status; 
To assess contractors’ IR35 status, clients will have to complete a status determination, which will ensure that there are no blanket assessments placing contractors inside IR35. Clients will still be able to insist that their contractors go on the payroll; 
If a contractor disputes their IR35 status as assessed by their client, they will have to appeal to the client directly; 
Small companies remain exempt from these new rules – only medium and large companies will be affected. (This means that if a contractor works for a small company, it will not be affected). 
As mentioned, if you are already complying with the existing rules, then you should feel minimal impact from the new legislation. The new rules are targeted at those who are not complying with the current rules. 
The full draft legislation can be found here

IR35 background: refresh your memory 

As we all know by now, off-payroll working rules (IR35) have been in place for almost twenty years. They were introduced in 2000 to ensure that people who work as contractors through their own limited companies pay the same level of Income Tax and National Insurance Contributions as employees. 
Following a reform to the rules in April 2017, public-sector organisations who took on contractors became responsible for ensuring that both they and the workers they engage were paying the correct amount of tax, which has been an effective method of improving tax compliance. 
At the Autumn Budget in 2017, the government revealed its plans to start a similar plan for tackling non-compliance in the private sector. A year later, during the Autumn Budget in 2018, it was announced that plans for the reform would be extended to medium and large organisations, and the changes would kick in from April 2020. 

Who will it impact? 

The changes are expected to impact around 170,000 individuals who currently work through their own limited company and would otherwise be employed if engaged directly by the client. To reiterate, if you are compliant you should feel minimal impact – but if you are non-compliant, you may feel some effect from the new rules, and it’s important to start acting now. 
Those who are non-compliant will be required to pay tax at the correct levels, and this will therefore lead to them facing additional tax liabilities. This could, in turn, lead to an impact on the amount of disposable income available to them – another reason why you should get in touch if you are in any way concerned that you may fall under this bracket. 
A consultation on the new legislation has now commenced, with a deadline of September 5th, 2019. 

Get your IR35 Private Sector: 5-Step Action Pack now! 

Nicola and the team at Effective Accounting have been preparing for this for months. We are fully prepared to work with contractors to support you over the coming months, to understand the changes, navigate the complex world of IR35 and in your communications with your client.  
Make sure you're one step ahead and get your IR35 Private Sector: 5-Step Action Pack now. Learn more here
For just £237 + VAT for a limited period (price will increase to £297 + VAT from 1 September 2019), you will get: 
Full written IR35 Contract Review; 
30-minute debrief call with Nicola to discuss the outcome of the IR35 Contract Review and its impact on you and your limited company; 
Communications Pack including email and letter templates to send to your client to get your communications started, and in the event that you need to appeal; 
30-minute call to discuss your very own action plan. 
Be proactive, take the initiative and get planning for April 2020! 

Click here to order your IR35 Private Sector: 5-Step Action Pack now! 

Written by 
Nicola J Sorrell 
- Effective Accounting 
Founder | Xero Champion | IR35 Expert 
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