The off-payroll working rules, IR 35 rules

The off-payroll working rules, IR35, can apply if a worker (sometimes known as a contractor) provides their services through an intermediary.

An intermediary will usually be the worker’s service company, but could also be any of the following:

• a partnership
• a managed service company
• an individual

The IR35 rules make sure that workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same tax and National Insurance contributions as employees.

Who the rules apply to

You may be affected by these rules if you are:

• a worker who provides their services through their intermediary
• a client who receives services from a worker through their intermediary
• an agency providing workers’ services through their intermediary

If the IR35 legislations apply, you should certainly pay the tax deductions. It is the responsibility of the employer to deduct tax, and National Insurance contributions to pay to HMRC.

When the rules apply

The rules apply if a worker provides their services to a client through an intermediary. However, he would be classed as an employee if they have agreed to be in the contract directly.

Before 6 April 2020

If you’re a worker and your client is in the public sector, it’s their responsibility to decide your employment status. However, you should be well aware of their decision. In case you’re a worker, and your client is in the private sector, it’s your intermediary’s responsibility to decide your employment status for each contract. Since the private sector includes third sector organisations, such as some charities you should comply with the IR35 rules accordingly.

From 6 April 2020

From 6 April 2020, the enforcement of IR35 legislation has changed. All public sector authorities and medium and large-sized private sector clients will be responsible for deciding if the IR35 rules apply. If a worker provides services to a small client in the private sector, the worker’s intermediary will remain responsible for deciding the worker’s employment status and if the rules apply.