Posted-on February 2020 By James Ward
HMRC’s controversial IR35 ‘off-payroll’ legislation rolls out to private sector contractors in April. We are helping marine organisations and contractors navigate the waters in the lead up to what is considered the biggest ever shake-up for contractors in the private sector.
The intermediaries legislation – or IR35, as it is now known first came into force in April 2000, with the intention of preventing a worker from ‘disguising’ themselves as a freelancer to pay less tax. IR35 assesses whether contractors are ‘actually’ employees when they take on work for clients. Now under the latest reforms, it will be the responsibility of the private sector ‘clients’ or ‘hirers’ to assess whether or not contractors need to pay Income Tax and National Insurance contributions. From 6th April, medium and large private sector businesses will need to apply the IR35 rules if they meet two or more of the following conditions:
· An annual turnover of more than £10.2m
· A balance sheet total of more than £5.1m
· More than 50 employees
Inside or outside of IR35?
If an organisation engages a contractor and determines the role is ‘inside’ IR35, income tax and National Insurance will now be deducted from the contractor pay, exactly as if they are employees. Roles ‘outside’ of IR35 are ones where contractors will be taxed as they were previously.
We are leading the way on this subject, readying clients and contractors across the industry on this important change. It is the responsibility of the client to complete an assessment to determine IR35.
James Ward, our Managing Director, comments: “IR35 can seem complicated with so many considerations and assessments to be made. Marine Resources has the knowledge to help clients and contractors navigate through this reform. We are also working with accredited payroll partners to ensure all assignments and contractors are fully compliant.
He continues: “Over the past month, we have witnessed contractors withdrawing from roles across the industry because of concerns about IR35, so understanding it is critical, especially with such a high proportion of contractors across the industry. The reform is a seismic shift and will impact many individuals who may be used to paying tax in a certain way. Some may reconsider working as a contractor and opt for a PAYE role. If marine businesses out there are using contractors and have not started making preparations for IR35 or do not know what IR35 is, I would urge them to make it a priority.”
We have put together fact sheets for both contractors and clients for more information, just go to our IR35 page: https://www.marineresources.co.uk/ir35
Alternatively, we are on hand to answer any IR35 questions over the phone via (0)23 8063 3399.
For government advice: https://www.gov.uk/guidance/understanding-off-payroll-working-ir35
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