What is IR35?
IR35 is anti-avoidance tax legislation which sets the rules to make sure contractors working through personal service companies (PSCs) pay the correct tax. The rules are in place to address what HMRC describe as “deemed employment”, where individuals operating through PSCs work like employees and they should pay broadly the same income tax and NICs regardless of the structure they work through.
The first piece of legislation came into force in April 2000. In April 2017 the government introduced the “off-payroll working reforms”, a separate piece of new tax legislation applying to the public sector. This was extended to the private sector from 6 April 2021.
What impact does IR35 have for our flexible consultants?
Responsibility for determining how an assignment should be taxed sits with the end client (which might be either Pinsent Masons or an external Pinsent Masons’ client).
The end client will be responsible for providing a status determination statement (‘SDS’) confirming their IR35 assessment.
For assignments falling inside IR35, liability for income tax and national insurance contributions, payable by operation of the IR35 rules will sit with Vario/Pinsent Masons as ‘fee-payer’ will have an obligation to make the relevant PAYE deductions.
For assignments falling outside IR35, the consultant’s PSC will be responsible for accounting for tax and national insurance contributions as appropriate.
I have a question about how IR35 affects me, who should I contact?
Alongside your usual Vario team contact, our dedicated IR35 team are on hand to provide you with any help and support you may need, or to answer any individual queries. Please do not hesitate to contact them via our IR35 mailbox: [email protected]