IR35 changes re Contractors are your clients ready?
Who will be affected by these changes?
IR35 changes are due to hit the private sector in April 2020, by operating via a company, individuals can remunerate themselves more tax efficiently.
However, sometimes depending on the contract the laws on whether the contractor is allowed to be a limited company can become a concern.
Where a contractor comes under the IR35 legislation, PAYE tax and NI becomes payable as if that contractor was an employee and HMRC can also ask for previous years to be re-examined.
IR35 changes to rules mean that this tax could be collected from either the contractor or the company engaging them.
What happens if the contractor is captured by the IR35 legislation?
Failure to account correctly for PAYE can result in significant interest and penalties.
With regular submissions with Making Tax Digital, HMRC have instant access to the contractor’s information, so businesses need to be prepared.
What to do if you are unsure if you fall under IR35 legislation?
If you fear you may fall into the category of contractor then it may be a good idea to check with the company that is engaging your services so they can evaluate your situation and offer advice on how you can manage your IR35 risk.
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