New IR35 legislation effective today

The new IR35 legislation, affecting thousands of workers across the UK, came into effect today.

After a one year delay due to the COVID-19 pandemic, the new off-payroll working regulations are now in force for freelancers and contractors in the private sector. This follows on from the public sector changes back in 2017.

The purpose of IR35 is to clamp down on the growing use of contractors providing services, usually through a Personal Service Company, while working like a traditional employee but experiencing tax benefits afforded them by a limited company.

From today, a contractor is no longer responsible for determining their IR35 status. It will be the end client where the assignment is being carried out that decides the status of a contractor’s assignment. They then take on financial responsibility for potential underpayment of taxes.

A contractor’s end client is required to carry out an IR35 assessment for each assignment and pass the results of that assessment, in the form of a Status Determination Statement (SDS), to each party in the supply chain.

Once a role assessment is complete and found to be ‘inside IR35’, an individual may require an umbrella solution.

ICS Umbrella offers a hassle-free way for contractors to be paid and provides full employment rights as the contractor becomes an employee of the umbrella company. Our FCSA accredited umbrella solution includes statutory sick pay, holiday pay and parental leave, along with comprehensive insurances and access to extensive benefits such as retail discounts, corporate gym memberships and access to online GPs with an email prescription service.

If a role is found to be ‘outside IR35’, a contractor can use their Personal Service Company, just as before, as long as they have their SDS from the end client. ICS Accounting offers support packages that include help and advice on staying ahead of any further IR35 amendments, carrying out assignment reviews when roles change, and insurances to back the outside result.

Whether you are currently working as a contractor, considering becoming a contractor or own a business that hires contractors, IR35 is something that you must be familiar with.

If you have any questions or need clarification, please contact one of the IR35 experts at ICS Accounting on 0800 880 7056 or email ir35@icsuk.com