Confused and concerned about you and IR35? Clarity here!
Right now some of you will know there is a lot of hubbub in the press and social media about changes to the rules for contractors in the private sector. For some this is worrying because it can affect income or choices to be made.
The Real Business Club provides finance and tax training to bookkeepers and accountants as well as services to individual contractor clients who are affected. To do this, Dawn Edwards, our finance expert, keeps an informed eagle eye on all changes!
5 points we can help you be confident and clear about
From 6th April 2020 if you are a contractor working for the private sector, directly or through an agency, new IR35 rules might affect you.
These changes are yet to be finalised as the government has launched an enquiry into the proposed reforms, because there are doubts as to how the rules will work in practice.
The new requirements from 6th April 2020 oblige the end user business to determine whether a contract of work falls within the new off-payroll rules, often referred to as IR35.
The guidelines impact the worker/contractor who have a contract with a large or medium-sized business.
However, the rules won’t affect any worker/contractor undertaking a contract with a small business. In this case the IR35 status will remain the responsibility of the worker/contractor.
The end user must provide the worker/contractor with their decision about their status. The ruling is a legal document known as a Status Determination Statement (SDS). This maybe passed down the chain via an agency. The SDS must be based on the contract and/or what is really implemented.
The worker/contractor can disagree with the SDS by way of an appeal. The end user has 45 days to respond giving a clear understanding how the decision was arrived at. Then, either the original decision is upheld or, if the decision is reversed, a revised SDS would be issued.
How we can help you feel clear and confident you are making the right decisions
- Determination of employment status - if you are caught by these new rules and your engager has determined you as being within IR35, let us work with you to review your contract of work. This will be useful should you wish to submit an appeal against the determination.
- Help to wind down your existing limited company in a tax efficient way - whether you have decided to accept a PAYE engagement, either as a direct employee or through an umbrella company.
- Impact for you under PAYE - you will need to consider the rate of pay being offered, the tax consequences of the PAYE engagement and the contractual terms of the employment contract.
- Umbrella companies will deal with the administration and can be attractive for a short-term contractor. Being an employee will lead to a similar tax outcome, but a client may benefit from greater employment rights than typically offered through an umbrella company.
Need some clear advice?
Contact Dawn if you want to discuss your position and a way forward:
Contact her on 07896 665104 or email: email@example.com
Dawn leads our team delivering common sense clever finance services to businesses.
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This blog comes from The Real Business Club, founded by Dawn Edwards, finance and tax expert and Isabel King, business growth expert and business coach. It is an independent provider of training and advice and support.
The opinions expressed are personal.
We often take inspiration for these blogs from the many business owners and businesses that we train, coach and work with.
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