Limited company contractors are currently responsible for determining their own IR35 status. From here contractors are responsible for making tax and national insurance deductions on each contract they undertake.
However, this will all change in 2021 when IR35 status determination will no longer sit with the contractor. Instead it will become the responsibility of the end client or hirer and be passed down through the supply chain (if a fee payer is in place – generally a recruitment agency) to the contractor. Thus, tax liability and the responsibility of deducting tax and national insurance contributions, will sit with the “fee payer”.
As well as impacting businesses who engage with company contractors, these changes are also set to have a huge impact on contractors.
Whether you’re an individual working as a contractor through an intermediary, such as your own PSC, providing services to public sector organisations or medium or large sized organisations outside of the public sector, the changes to off-payroll working rules will apply to you.
As IR35 changes approach businesses should be taking adquate steps to prepare for IR35 changes so that their contractors, as well as their business, are protected. However, as we have covered in our blog, we are seeing businesses turn to blanket approaches that do not individually assess contractors and instead mark all contractors inside of IR35. Alternatively, we are seeing large organisations withdrawing contractors from their business plans going forward in order to avoid IR35 changes altogether.
As such, we are sadly seeing an increasing decline in contractors and increasing reports of distressed contractors worried about their future ahead of IR35 changes.
Interested to read or listen to our take on IR35 and advice that may help you and your business by April 2021?
Head over to our News page to hear about the latest news stories.
Optimus Shield can offer IR35 protection that eradicates the worry that comes with IR35 changes and allow businesses and contractors to transition smoothly.
Our bespoke IR35 determination/fee payer service provides personal protection insurance for the contractor in the event of any HMRC investigation. By using our service, businesses can reassure contractors and ensure full IR35 compliance and protection. In turn, businesses will retain their top contracting talent and maintain a competitive edge in their marketplace.
Optimus Shield’s IR35 protection service:
Optimus Shield is the result of heavily invested research and development to tackle the issues now facing the private sector due to changes to the IR35 legislation being rolled out in April 2021.