Possible changes ahead for contractors
Updated: Mar 21
IR35 rules are designed to assess whether an individual working through their own Personal Service Company should actually be treated as an employee and paid through the PAYE system. Workers using Personal Service Companies have the advantage of being able to draw dividends which are generally more tax efficient, and not subject to National Insurance.
Changes were introduced in April 2017 in the public sector, which meant that public bodies using contractors were effectively responsible for enforcing these so-called IR35 rules.
Private sector contractors are already subject to IR35 rules, but a consultation has been launched by HMRC into how rules will operate that make firms liable for determining the tax status of individuals who work through Personal Service Companies, when these rules are extended to the private sector from April 2020.
The HMRC consultation can be found at the link below, along with an article from IT Pro on the same subject.
Individuals working as contractors through their own Personal Service Company will undoubtedly already be well aware of the IR35 legislation. However it is important to consider the impact that these changes might bring.
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