From the 6 April 2021 Off-Payroll working rules will change and be applied differently. From April 2021 all public authorities and medium and large sized Employers will be responsible for determining the employment status of workers (ie Contractors).
This change was due to take place April 2020, however, was postponed due to the Coronavirus Pandemic.
What is the reason behind these new rules?
These new rules make sure that contractors, who would have been classed as an Employee if they were providing their services directly to a Company, pay the same tax and National Insurance contributions as Employees.
As an Employer from April 2021 if you are a medium and large-sized private sector Employer you will need to apply them into your Company. The private sector does include third sector organisations, such as some charities.
The rules apply if as a Company you meet two or more of the following conditions:
- You have a balance sheet total of more than £5.1 million
- You have more than 50 Employees
- You have an annual turnover of more than £10.2 million
*Balance sheet total is the total amounts shown as assets in your Company’s balance sheet before deducting any liabilities.
When you need to start applying the IR35 Rules?
If you are a private sector Company, you must start applying the rules when the change comes into force on 6 April 2021. However, we advise you start the process now without delay.
What do we need to do as a company?
As an Employer you will need to decide the employment status of every worker that operates through their own intermediary, even if they are provided through an agency.
You should communicate your determination using a ‘Status Determination Statement’ (SDS).
The ‘Status Determination Statement’ (SDS) must:
- Be passed to the Contractor and the person or organisation you contract with
- Give your conclusion and the reasons you came to that conclusion
*As an Employer you can issue the ‘Status Determination Statement’ SDS prior to 6 April 2021.
As the Employer you also have the responsibility to:
- Ensure you keep detailed records of the employment status determinations, to include the reason for the determination and the fees that are paid
- Have a process in place to deal with any disagreements that may arise from your determination
- Confirm the size of the Company if asked by the Contractor or the organisation they work for
*If the Off-Payroll working rules apply and you are also the fee payer, you will need to deduct and pay tax and National Insurance Contributions to HMRC.
You can use the Check Employment Status for tax on the Government website, to help decide if the Off-Payroll working rules apply to you.
How we can help you?
We know the Off-Payroll working rules are complex, we are here to support, guide and provide you with the assistance you need during this process, we are available to discuss your needs and we are more than happy to offer you a free and no obligation consultation.
You can speak to a member of the team on: 0333 006 9489 or email us at [email protected]
Author: Sophie Baker