IR35 – Off payroll working rules guidance for intermediaries.
Matt Walker – 27 April 2021
So what’s changed?
- Off payroll working rules changed from 6 April 2021. Large/medium sized businesses are now responsible for determining the employment status of workers/contractors
- There are no rule changes yet for small businesses with contractors still able to decide their own status for payments.
Am I effected?
- The changes apply to all large and medium sized businesses within the private sector. A business falls into this category if they meet 2 of the following criteria
- Has an annual turnover of more than £10.2 million
- Has a balance sheet total of more than £5.1 million
- Has more than 50 employees
What are the rules?
- The rules apply if a worker is providing a service through an intermediary but would be classed as an employee if they were contracted directly.
An intermediary is a party who makes arrangements for, or pays, an individual to work for a third party. There are broadly 3 categories of Intermediary:
- A limited company (usually know as a personal service company or PSC). This is the perhaps the most common arrangement. A PCS is a company in which the worker has a ‘material interest’ – that is where the individual is a director of the company and controls more than 5% of the ordinary share capital of the company
- A partnership
- An unincorporated body
I work through a PSC for a large/medium sized business – what do I need to do?
- Nothing!! – the company you work for will be responsible for deciding your employment status and will provide you with a Status Determination Statement (SDS).
- If you don’t agree with their assessment of your status you must notify the company – they will have 45 days to respond.
- If the off payroll working rules apply to your assignment with the company, they will set you up on PAYE and will deduct income tax and National Insurance before paying you. They will also pay employer’s National Insurance
I work through a PSC for a small business – what do I need to do?
- As the intermediary you will continue to be responsible for determining the workers employment status to see if the off payroll working rules apply
- Be aware that the same rules still apply to off payroll working – the only difference is the responsibility in determining status
Give me an example
James is a sports journalist from Liverpool. He is engaged through his own PSC to a regional radio station for whom he has presented a Saturday afternoon football phone in show for the last 7 months. The radio station is a medium sized business and has just provided James with a Status Determination Status informing him that the off payroll working rules apply to his contract.
James has used the ‘Check Employment Status for Tax (CEST) tool as Gov.uk and agrees with the radio stations determination of his status (if he had disagreed he would need to notify the station)
The radio station will continue to pay James’ PSC but must now set James up on their payroll and deduct income tax and national insurance on as well as pay employers national insurance
James’ PSC will still need to submit a tax return, but relief will be given for the tax already paid
Online applications now open for the fourth self-employment grant.
Steve Dunn – 6 May 2021
The online service for applications for the fourth Self-employment Income Support Scheme (SEISS) grant is now open with applicants able to claim 80% of three months’ average trading profits, capped at £7,500.
This grant covers the period 1 February to 30 April 2021 with the scheme having now been extended to include those who filed a 2019/20 self-assessment tax return before 3 March 2021 and there is no requirement for an earlier SEISS grant to have been received in order to claim the fourth grant.
In order to claim, applicants must have been impacted by a reduced demand, capacity or activity or have been temporarily unable to trade as a result of Covid-19.
All claims for the fourth grant need to be made by 1 June 2021 and must be submitted by the individual self-employed worker and not their accountant or tax adviser.
A fifth grant covering the period 1 May to 30 September 2021 will be available from July with further details to be provided in due course.
For information on how to apply click here.
Home working tax relief
Matt Walker – 6 May 2021
From 6 April 2020, employees who have been working from home, have been able to receive £6 per week tax-free from their employer to cover the additional costs of this home working.
Alternatively, where this has not been paid by the employer, employees can claim to receive the tax relief direct from HMRC with the full £6 per week being available even where their time has been split between home and the office.
Claims can be made on the individuals Self-Assessment Tax return or by applying through HMRC’s online portal which can be found here.
For more information on the home working tax relief or to see if you are eligible to claim any other employment related expenses, contact us today.
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Bache Brown & Co Ltd is a company registered in England No. 02374491. Registered Office: Swinford House, Albion Street, Brierley Hill, West Midlands, DY5 3EE