All about the changes in IR35 from April 2021

There are changes to IR35 coming into effect from April this year that you need to be aware of if you employ contractors through an intermediary. IR35 describes two sets of tax legislation that were brought in with the main purpose to prevent tax avoidance both by contractors and the businesses that are hiring them. IR35 has been around since 2000 however has always come under heavy scrutiny due to poor implementation by HMRC and a lack of clarity.

And before April 6, 2021, public businesses that hired employees through an intermediary have not needed to consider whether IR35 applied to their situation in particular.

However, the changes coming into effect next month mean that even if your organisation or the organisation in question is a public sector body, checks need to be done prior to agreeing on an engagement with the intermediary in question.

Also, from April 6 2021, if the end client that is receiving the services is a medium or large-sized private organisation, they no longer have to consider whether IR35 applies to them. Instead, you would need to simply evaluate whether the person in question would be classed as an employee if you were to be hiring them directly for said services.

If the company or business in question is a small scale private sector organisation, there is no change to the position they are in and just like they did before will still have to undertake the same considerations as to the application of the IR35 rules to their scenario.

If you want to know more about the IR35 legislation and how it could affect your business and how you hire services get in touch with a member of our team here at D&K Accounting. We are a team of profit-first professionals with many years of experience in helping businesses of all sizes across the UK.

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