HMRC confirm the new rules will extend to the private sector with effect from 6th April 2020 

With the introduction of IR35 reform in the public sector in 2017 we advised members back in October 2018 that these reforms would likely extend into the private sector as a result of the 2018 Autumn Budget whereby businesses may potentially be liable to determine their contractors' IR35 status; this means they will be solely responsible for any unpaid tax avoided by their contractors.

What is IR35

IR35 is the off-payroll working rules that can apply if a worker provides their services through an intermediary. The rules make sure that workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same tax and National Insurance contributions as employees.

What is an intermediary

An intermediary will usually be the worker’s own personal service company. They could also be a partnership, a managed service company, or an individual.

Who is affected by the rules

• a worker who provides their services through their intermediary
• a client who receives services from a worker through their intermediary
• an agency providing workers’ services through their intermediary

If the rules apply, tax and National Insurance contributions must be deducted from fees and paid to HMRC.

When do the Rules apply

The rules apply if a worker provides their services to a client through an intermediary, but would be classed as an employee if they were contracted directly.

Before 6 April 2020: If you’re a worker and your client is in the public sector, it’s their responsibility to decide your employment status. You should be told of their decision. If you are a worker and your client is in the private sector, it’s your intermediary’s responsibility to decide your own employment status for each contract. The private sector includes third sector organisations, such as some charities.

From 6 April 2020:  All public sector authorities and medium and large-sized private sector clients will be responsible for deciding if the rules apply.  If a worker provides services to a small client in the private sector, the worker’s intermediary will remain responsible for deciding the worker’s

Check employment status

Use this tool to find out if you, or a worker on a specific engagement, should be classed as employed or self-employed for tax purposes.  There must be a contract in place to see whether the engagement is classed as employment or self-employment. The tool assumes there will be one in place.  This service is anonymous and will not store any information you enter, or the result given. You will be able to save and print your result for your own records.

Take me to the hrmC tool to check employment status      |

Take me to HMRC additional supporting guidance for help TO USE the tool checker

Additional resources

Please visit https://www.gov.uk/topic/business-tax/ir35 for the following additional resources or click on the direct links below. 

• April 2020 changes to off-payroll working for clients
• April 2020 changes to off-payroll working for intermediaries
• Off-payroll working for agencies
• Public sector off-payroll working for clients
• Private sector off-payroll working for clients
• Public sector off-payroll working for intermediaries
• Private sector off-payroll working for intermediaries
• Fee-payer responsibilities under the off-payroll working rules
• Employment Status Manual