The IR35 Private Sector reform will commence in April 2020. This will involve off-payroll rules being extended to both large and medium-sized businesses within the private sector. These changes are something everyone should be aware of. However, if you’re employed by Exceed Umbrella you won’t have to worry about this at all as the changes do not affect you. On the other hand, if you’re not employed by us or any other Umbrella company, and are Self-Employed, you will be impacted. We’ve put together a few tips to help you prepare for the IR35 reform.
What determines your status?
Knowing what will determine whether your contracts are inside or outside IR35 is key. The main aspects that will be considered are;
- How much control your client has over the way you work
- Whether you can supply a replacement to carry out your work if you’re unable to
- Whether your client needs you to complete a specific project or whether either party anticipates additional future work
- Factors such as equipment used financial risk are also considered.
Understand the process
Understanding the process is very important. The end client (large or medium-sized businesses) will be now be in charge of determining a contractor’s IR35 status. Even if you’re confident that your business is operating outside of IR35, the end client may decide otherwise. Therefore it is best to not assume your status until you have been given the end-client’s decision.
Check your practices
It’s important to know that HMRC won’t just use contracts to assess contractors’ tax documentation. Working practices will also be a factor. Things like the autonomy you have over the ways in which you work and your level of integration within the business are important. These things need to show that you are not in fact a ‘disguised employee’ and caught inside IR35.
Prepared for rate changes
If the end client comes to the decision that your status is inside IR35, this will affect your pay. Whoever pays your fees will be responsible for deducting national insurance and PAYE from your take-home pay, meaning this will be reduced. If you are a contractor with Exceed we will always make sure all of your deductions are correct, so there is no need to worry. To prepare for a change in rate, it could be worthwhile negotiating a higher rate to make sure you receive the same take-home pay as you earned previously. If this isn’t possible, you could consider finding an alternative, higher paid, contract.
Always get expert advice
If you’re still unsure about the IR35 Private Sector reforms, or any surrounding topics, make sure you contact an expert. An IR35 expert will be able to guide you in the right direction, get the most out of your earnings and provide clear advice on your next steps.
You can read our other articles on IR35 here;
