IR35: HMRC publishes private sector tax rules
Updated: Aug 11, 2019
Organisations have just nine months to prepare for changes to off-payroll working rules, which are being extended to the private and third sectors, with HM Revenue & Customs (HMRC) publishing draft legislation today.
From April 2020 private sector firms will have to check whether contractors need to pay income tax and national insurance contributions, shifting the responsibility for conducting such checks from the contractor to the organisation using their services.
“HMRC said the changes are expected to affect 170,000 individuals working through their own company, who would be employed if engaged directly, as well as up to 60,000 organisations that use workers employed by a PSC..”
The reformed rules – known as IR35 – have been in place for public sector organisations contracting workers supplied through their own personal service companies (PSCs) since 2017.
But the draft Finance Bill published today (11 July) states that private sector firms that enter into contracts or make payments to workers engaged through a PSC on after 6 April 2020 will have to check the workers’ tax status.