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The grey area of IR35 'off-payroll' earning


The grey area of 'off-payroll' applies to individuals who work like an employee but on a freelance basis, more often than not through their own business.


It is of concern to HMRC as people essentially performing the same role are paying different rates of tax based on their status as employed or contracted individuals. If, as a contractor or freelancer, you feel this might affect you, please do get in touch and we can discuss and clarify your specific situation. Changes will be announced in April 2020 and will most likely be referred to in this year's Spring Budget.


A review of the changes to off-payroll working is due to take place before April 2020. It is planned to make sure any changes go as smoothly as possible and allow legislation to be finalised. The timescale is causing an issue to some organisations and workers as projects are already being planned without a full understanding of how changes might affect budgets and pay after April.


Along with this, the government is also reconsidering CEST - the tool that checks employment status. Until it is updated, businesses can continue to use the current version and this will be accepted by HMRC.


It would seem that clarification is needed so that freelance workers can operate correctly and within the law, paying the right levels of National Insurance and tax. Since 2017 public sector organisations have been responsible for taking NIC and PAYE at source. It is thought this will apply to medium and large businesses going forward. The UK's 1.5million small businesses will not be affected. What has been promised though is that any changes will only affect payment for services provided on or after 6 April 2020.


Do talk to us if this affects you. We are here to help and make sure you are in the best possible position for any projects you are involved in. We will continue to address this through future blogs and in our meetings with you.


Useful links:


HMRC announces change to the off-payroll working rules

Read article here


Contractor Factsheet

Read article here


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