IR35 changes for public sector contractors

New legislation has changed the IR35 rules for contractors. The new rules apply to any payments made on or after 6th April 2017, including payments made for contracts entered into before this date.

 

Who is affected by this change?

Individuals working in the public sector who work through intermediaries, such as personal service companies, are no longer subject to IR35 rules. This includes:

  • Public authorities hiring off-payroll contractors
  • Public sector managers – tax, payroll, human resources and procurement
  • Agencies who supply contractors to the public sector
  • Contractors providing services to a public authority through an intermediary.

Who decides whether work falls within IR35?

Previously, intermediaries were responsible for calculating and paying the contractor’s income tax and NI owed to HMRC. Now public sector organisations or agencies paying off-payroll workers are responsible for deciding whether the work falls within IR35. They must deduct income tax and national insurance (NI) if they deem the worker an employee within IR35.

What impact will this have on contractors?

Contractors working with any of the following public sector organisations will no longer have their IR35 status determined by their intermediary:

  • Government departments
  • Police and fire authorities
  • Local authorities
  • Educational institutions including universities
  • The BBC and Channel 4

The NHS was previously included in this list with “all locum, agency and bank staff” falling under the new tax rules. However, in response to complaints by doctors, the regulator has told health trusts to examine each case on an individual basis before deciding whether agency workers are covered by the new IR35 rules.

If you’re not sure how this change will affect you, contact NWNBluesquared for advice.

Contact Us

Please click here to contact us

 

or call 020 8550 3131

 

Topics Squared


Further reading


CGT Planning 2017/18 - an Unexpectedly Simple Guide

Capital Gains Tax is currently a political hot potato

Read more

Investing in Small Companies - an Unexpectedly Simple Guide

Investing in small companies can provide tax benefits for investors and help boost the growth of UK businesses

Read more

2017/18 Tax Tables

After the 2017 Spring Budget, NWN offers an easy to download card of the latest tax rates, including Income Tax, CGT, VAT, vehicle benefits, stamp duty and a whole lot more

Read more

R & D Tax Credits for SMEs - an Unexpectedly Simple Guide

tax relief is available to small businesses in the science and tech sectors to boost research and development

Read more
The information in this site is of a general nature and is not a substitute for professional advice. You are recommended to obtain specific professional advice before you take any action. All Rights Reserved.