In his Autumn Statement on 29 October 2018, the Chancellor announced that the government would be extending the off-payroll working rules (known as IR35) to the private sector, but this will not be introduced until April 2020 and small organisations would also be exempt from any changes.
This means that from April 2020, for medium and large sized organisations, responsibility for operating the off-payroll working rules will be passed to ‘end-users’ (private sector organisations) to establish whether contractors’ engagement falls within IR35 for tax purposes.
When making the announcement in October, the government did promise a further consultation on these reforms. We are now expecting this will be announced sometime during February 2019 and this will provide us all with a much a clearer outline of the proposals.
We have already, shared with our clients, the impact we witnessed when IR35 was introduced to the public sector. This included increased burden to businesses, inflated administration costs, and risks of contractor rate increase demands to compensate for the impact on earnings, coupled with employment rights claims from workers deemed to be inside IR35.
Once the further HMRC consultation is announced, we will work hard to influence a positive outcome and we will also engage with our clients to get involved, as it is really important that the view of business are heard.
Draft legislation covering the changes for the private sector is expected to be available in summer 2019. Ahead of this will be the opportunity to provide the government with feedback on their proposals and offer alternative methods of achieving compliance for consideration.
In the meantime, we want to reassure you that we are here to help. If you do have any immediate queries on what the changes to IR35 could mean for your business, please do get in touch via firstname.lastname@example.org.