What does changing IR35 mean for UK businesses?

• United Kingdom

• Employment law

10-03-2021

The UK off-payroll working rules, commonly known as IR35, have been in existence since the early 2000’s and are designed to ensure that individuals who work in a similar way to employees, such as some contractors, consultants and freelancers, pay broadly the same income tax and national insurance contributions as employees. UK government concerns over non-compliance with the IR35 rules and, specifically, an underpayment of tax, resulted in a reformed IR35 regime for the public sector in 2017.

Proposals to extend the rules to the private sector were then published and are now due to take effect from 6 April 2021. To support businesses in understanding and implementing any changes we have assembled below a summary guide, a flowchart to help assess whether the changes apply, and three short videos on IR35 and the practical implications.

IR35 flowchart - when do the changes apply?

View our guide: Counting down to the off-payroll IR35 changes.

IR35 - part 1 – A brief recap on the IR35 changes

In this video we provide a refresher on IR35 and last minute technical changes in the Finance Act 2020. 

IR35 - part 2 - Practical implications: advantages and disadvantages of different recruitment models

In this video we work through some of the practical implications and review how IR35 impacts different recruitment models. 

IR35 - part 3 - Practical implications: common questions

 In this video we highlight some of the commonly asked commercial questions in relation to IR35.

IR35 - part 4 – Status determination statement

In this video we look at the status determination statement (SDS) which is a key part of the process for IR35 implementation. We provide information on when in the process the SDS needs to be carried out, how you can go about undertaking status determinations and the format the SDS might take. 

IR35 - part 5 - some myths in the market place

As the IR35 implementation deadline (6 April 2021) approaches, we are helping clients develop & implement their response. We are finding that certain clients are being presented with apparent ‘solutions’, some of which do not stand up to scrutiny. One of the potential myths in the market place is that a ‘statement of work’ model automatically means that your organisation will be ‘outside IR35’. Ed Norris and Mark Hammerton discuss where a client receiving a genuinely managed service is not subject to IR35.