The government changes to off-payroll working (IR35) rules go live on 6th April 2020 and this will affect any contractors working through Recruitment Agencies, a Personal Service Company (PSC), and all Large and Medium-sized end clients.
Here are our top 10 tips on the IR35 changes and what it means for you:
1. The government has announced IR35 is being reviewed again and there may be changes but don’t take any chances - act now.
2. Many companies and contractors still aren’t fully prepared. Companies know they have to act and have verbally are committed to making a determination on IR35 status but aren’t in a position to do it just yet which has led to contractor uncertainty.
3. Remember it doesn’t affect every company. Your business/the business you are contracting at is exempt if they are a small business – ie. two of the following criteria are fulfilled:
- Annual turnover of not more than £10.2m
- Balance sheet total of not more than £5.1m
- The average number of employees no more than 50
In these circumstances, the Recruitment Agency you work via (or your PSC if working direct) becomes responsible for determining IR35 status.
4. You’re also exempt if you’re working through an umbrella company, assuming they are compliantly paying tax via a PAYE scheme. It’s only an issue for those with their own PSC or Limited Company.
5. It will affect everyone whose company isn’t defined as small. Also having a contract in place now that carries you beyond April doesn’t mean you are exempt, or the determination will happen at renewal. A determination will still need to be made before April 6th.
6. There are multiple tools out there – not just the government's CEST tool– to determine a contractor’s status. Multiple accountancy firms have created their own compliance tools that are fully insured so you aren’t just limited to one. Get in touch if you’d like details on alternatives to CEST.
7. Completing CEST, or any of the other tools on the market is a skill in itself so clients need to make sure that the questions are completed with a full understanding of their impact. Be prepared…
8. And with number 7 in mind, do you want to know what the CEST questions are?? You can read them online courtesy of a test case published by Weaver Wroot. All the questions feature on the first page so no need to read the whole thing. You can also complete the test online yourself to get an idea of the result (you can do this multiple times).
9. If you are determined to be inside IR35 you must ensure that you are paying the correct tax. If in doubt speak to an accountant – ASAP!
10. There are many different sources for information out there. Umbrella companies have some of the most comprehensive. Two of our favourites are:
If you’d like any additional info or you’re a contractor looking to take on a permanent challenge, get in touch and we’ll be able to offer you some personal advice.