Do you engage contractors in your business?

If you do, then you should start preparing for the change in the law that will be implemented in April 2020 so that you are not taken by surprise. You will by now have heard of the IR35 regime introduced by HM Revenue and Customs which relates to contractors who provide their services through an intermediary such as their own service company.

Due to perceived abuses of the IR35 scheme where contractors were responsible for their own tax affairs, changes were made in 2017 which only affected the public sector. This made the end user responsible for deciding not only if the rules applied but, if so, also to ensure that any payments made directly by the contractor (or any third party on their behalf) to an intermediary must have tax and Class 1 National Insurance contributions deducted from that payment.

For many public sector organisations the risk placed on them was too great so the decision was on the whole made to deem that the rules would apply and to treat individual contractors as if they were employees for tax and national insurance purposes. The contractors were on the whole not happy with this because it effectively reduced their income, made the work less attractive and caused something of an upheaval renegotiating terms.

So, please be advised that from April 2020 there is a plan afoot to also roll out these rules to private sector companies. There is as yet no clear definition as to the size of companies that this will be applied to. However, it seems that it is just a matter of time before it will be applied across the board.

If you are a business that relies heavily on contractors this lead in time does give you time to plan ahead so that you are not caught out when the changes do come into effect in just over a year’s time.

Our employment team members - Gill Brown, Jack Gardener, Kathleen Tingle by calling 01256 854631 are available to advise you on any employment issues however large or small.