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21st October 2019

How Does the new IR35 Guidance affect Contractors?

HMRC’s latest IR35 guidance and contractors

Are you a contractor? You’ll need to know how the new IR35 regime affects contractors

HMRC’s guidance on the new IR35 regime for the private sector is light on information for contractors.

If you’re a contractor personally providing services, what steps should you take before the new regime applies?

HMRC has published new guidance regarding the major changes to the IR35 regime for private sector contracts which take effect on 6 April 2020.

Unfortunately, it doesn’t clearly explain what will happen on 6 April if you’re the one providing services personally through your limited company.

HMRC’s guidance refers to you as a “worker” if you’re the person actually doing the job.

Your company, partnership or other organisation that bills for the work you do is an “intermediary” and the business you’re working for is the “client”.

From 6 April clients must decide if the new regime applies to them.

If it does, they must review the terms and conditions on which your provide you services and decide whether, if you worked direct rather than through your company, you would be an employee instead of a freelance contractor.

If the client decides you would be an employee it will deduct tax and NI for all future payments it makes to the intermediary e.g. your company.

While it must inform you of its decision to do this, it doesn’t have to until it pays you. 

If you’re a contractor and are unsure how the new IR35 guidance affects you, why not get in touch with our team? We would be happy to advise you.

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