IR35 is a piece of legislation that was introduced in 2000 as a way of tackling ‘disguised employment’ and taxing contractors at a similar rate to a company’s employees.
On 6th April 2021, IR35 rules will change to cover PSCs (Personal Service Companies) in the private sector. If your business engages contractors, temps, or any other workers who are not on your payroll, you will need to establish how the new rules affect you.
In April 2021, off-payroll working rules will be extended to the private sector. This may give your business some new responsibilities to consider.
Businesses engaging contractors via PSCs will become responsible for:
- Determining each contractor’s tax status (i.e. does IR35 apply to them?)
- Delivering this verdict to the contractor
- Ensuring that all relevant taxes and NICs are paid by the PSC and contractor
- First, make a list of your ‘off-payroll’ workers. How many PSCs (Personal Service Companies) are there? Related categories include sole traders and the self-employed.1
- Compile year-end dates. Segment your list by year-end date.2
- Complete the vitality rating to establish how vital each contractor is to your business.3
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