As of April 6th 2023, the 2017 and 2021 reforms to IR35 will be repealed. Learn more about what this mean for you.
IR35 (or the Intermediaries Legislation), refers to tax legislation introduced in April 2000. IR35 was introduced to crack down on a particular form of perceived tax avoidance, where individuals would seek to avoid paying employee income tax and NIC’s by supplying services through an intermediary (usually a Personal Service Company, PSC).
Initially, the legislation required the intermediary (PSC) to determine whether the worker would have been deemed an employee of the user’s end-client, but for the existence of the intermediary. If IR35 determined a worker was deemed an employee, the intermediary was required to operate payroll, make income tax deductions, cover the employee’s NICs and pay employer’s NIC’s on the fees received for the services.
However, this did not deter the perceived tax avoidance, so the Government introduced the off-payroll working rules to the public sector in 2017, shifting responsibility for determining employment status from the consultant to the end-client (or hirer).
In the Autumn 2018 Budget, it was confirmed that the reforms would be rolled out to the private sector. Originally intended for introduction in April 2020 but postponed amid the COVID-19 pandemic, IR35’s new off-payroll working rules are now set for April 2021.