What do the new IR35 changes mean for you?
You may be aware of the new IR35 rules that are being introduced on 6 April 2017 by the Government and HMRC that will affect the way people working for the NHS and other public bodies are taxed. This will affect people working via Personal Service Company (PSC)/ limited companies.
We have put together some useful information about the changes, so that you are aware of what is happening and how this may affect you.
If you have any questions about the new IR35 legislation, check out our Frequently Asked Question page
, our useful resources page
, or please feel free to contact us
What is IR35?
IR35 is also known as ‘intermediaries legislation’. It is basically a set of rules that affect your tax and National Insurance if you have a contract to work for a client through an intermediary.
An intermediary can be:
- your own limited company
- a service or personal service company (PSC)
- a partnership
You may need to follow IR35 if you work for a client through an intermediary.
If IR35 applies for a role you are in, you will be subject to PAYE income tax and National Insurance Contributions (NICs).
What is changing?
The responsibility for determining a public sector intermediary (PCS/limited company) contractor’s ‘IR35 status’ will move from the contractor (e.g. a nurse who gets paid through a limited company) to the public sector body (e.g. NHS) or staffing agency (e.g. Swiis Health & Social Care) Contractors with a PSC/limited company operating in the public sector will no longer get a say on whether or not the IR35 ‘intermediaries legislation’ applies to them.
The organisation (public sector body or agency) employing the contractor will become responsible for deducting and paying employment taxes and NICs to the tax authority.
Why are they changing?
The government believes these changes will make the tax system fairer and will make non-compliance with these rules harder, resulting in more money for the treasury.
What this potentially means for you
There is a consensus that many more public sector contractors with PSCs and limited companies will be considered to be ‘inside IR35’. This means that NICs and employment taxes will be deducted directly from their pay before being paid to their PCS/limited company.