IR35: Off-payroll working rules to go ahead in April 2021

Major changes to the off-payroll working rules will go ahead in April 2021, it has been confirmed.

The news comes after MPs voted against an amendment to delay the controversial legislation, known as IR35, for at least two years.

The rules – which aim to ensure that “two people sitting side by side doing the same work for the same employer are taxed in the same way” – were due to come into force in April 2020, but were delayed as a result of the coronavirus pandemic.

While primarily targeting contractors working through personal service companies (PSCs), the forthcoming legislation will pass responsibility – and liability – to the employer to determine how a contractor should pay tax.

Commenting on the changes, ContractorCalculator CEO Dave Chaplin says firms should have “nothing to fear” with careful planning.

“Moving forward, the market now needs to prepare and, with careful planning, firms have nothing to fear and can hire freelancers compliantly,” he said.

“We have already had a dress rehearsal, and many firms and contractors saw what would happen if they did not prepare properly. We now need to work together to avoid a cliff-edge scenario.”

Notably, the legislation does not apply to employers who do not meet at least two of the following: a turnover of £10.2 million or more; a balance sheet total of £5.1 million or more; and 50 employees or more.

For help and advice complying with the new off-payroll working rules, please get in touch with our expert team today.