IR35 For Contract Workers
Everything you need to know as a contractor regarding IR35…
What Does IR35 Mean For Contract Workers?
There are advantages and disadvantages for being a contract worker. With IR35 Off-Payroll rules affecting the private sector in April 2021, the updated legislation is likely to impact the large majority of UK’s self-employed workers. HMRC has ascertained that many contract workers, and for that matter businesses, are not playing by the rules. The proposed change to IR35 assure that the lost employer’s National Insurance can be collected – estimated to be close to £ 1 billion a year.
From April 2021, the responsibility will fall on end-user/client to decide whether contractors fall in or outside IR35, regardless whether the intermediary be an agency, labour supplier or payroll company. It will be the medium to large size businesses that meet HMRC’s criteria that will have to vet each worker, or in some cases, prohibit all self-employed workers from being on their sites.
So how will this affect contractors and businesses?
If workers are considered as inside IR35, contractors will need to pay the same income tax and NICs as if they were employed. The new changes to IR35 in 2021 will have a serious financial impact on the contractors’ earnings, reducing net incomes by up to 25%.
Respectively, this will have a financial impact on businesses as they will need to make appropriate changes to remain compliant, contributing Employer’s National Insurance and providing holiday and sick pay, as well as incorporating the worker on their company pension scheme.
Futurelink can help to mitigate the costs. We can help by offering free expert advice and a number of payment options suitable for those in or outside of IR35.
Read more on What does it mean to be inside or outside of IR35?