HMRC have finally released their IR35 tool, aimed predominately at public sector workers, enabling them to assess contracts and employment status.
HMRC state on the .GOV website:
“Use this service to find out if you, or a worker on a specific engagement, should be classed as employed or self-employed for tax purposes….”
If the tool determines that IR35 does not apply to an engagement, a worker should show the results to it’s client or agency who should then review and agree that the information has been input accurately and reflects the terms of engagement and working practices. We would strongly recommend this input is documented and signed.
There is no reason why a business shouldn’t be able to carry on being paid as a business if it is deemed outside IR35. The problem sits where IR35 is deemed to apply, in this case tax will be deducted at source, as it is for employees, by the end client or intermediary, and this decision may apply retrospectively if the contract has been in place for some time.
The tool should be used by:
· worker providing a service
· person or organisation hiring a worker
· agency that’s placing a worker
You can find the tool here, use it to test your status now:
It is a commonly held belief that upcoming changes to off payroll workers in the public sector is likely to be extended to the private sector in 2018.
The tax system is unable to keep up with the increase of self-employed people in the UK, growing by 26% last year.
Employment law is too complicated, therefore it has been suggested that the rules on NIC and income tax should be aligned for the employed, self employed and those using personal service companies simplifying the tax regime.
It is likely that the Chancellor will consult on his decision to align income tax and NIC before committing to any changes in the autumn Budget.
Call us on 0800 169 3278 to discuss how this will impact you or to arrange a free consultation to discuss your overall tax position and effectiveness.