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New Off-payroll working rules – also known as IR35

  • February 13, 2020
 

We are receiving lots of enquirues into IR35 mainly from Registered Nurses (RNs) looking to join Retain and we would currently encourage all to look into PAYE and consider the benefits, such as, Paid holidays, Pension Contributions, SSP, and many more - we also offer contracted hours. Many of our customers are large national companies and will be risk averse when it comes to these rules.

Please see useful fact sheet below.

The off-payroll working rules can apply if a worker provides their services through an intermediary, which is
usually the worker’s own personal service company (PSC).
The rules make sure that individuals working like employees, but through their own limited company, pay
broadly the same tax and National Insurance contributions (NICs) as individuals who are employed directly.

To work out whether the rules apply, for all payments made after 6 April 2020, engagers of off payroll
workers will be required to make a decision about whether the worker is employed or self-employed for tax
purposes. This is known as an ‘employment status determination’. Previously the responsibility for
determining employment status for tax fell to the individual worker/PSC.

Currently, an individual with an income of £50,000 who works through their own company, but doesn’t
follow the rules, will contribute less (through tax, NIC and employer’s NICs) than somebody
doing a very similar job as an employee. This includes employer NICs contributions.
Therefore the government announced that this change will be introduced to ensure consistency and
compliance across the labour market.

This is not a new tax. These changes are intended to encourage compliance with the existing rules, and to
make sure those affected pay the right tax from April 2020 onwards. This reform will provide £3 billion for
essential public services, including the NHS, over the next 4 years.

This reform does not prevent people from working through their own limited companies and does not affect
the self-employed. Individuals/PSCs who are following the existing rules correctly will feel little impact.
What are the key status determination tests?

An engager will look at the following tests/status indicators, to determine an individual’s employment status
for tax:
Personal Service – Is it always this individual that provides the service or can they provide a
substitute?
Control – who controls how, where and when the work is done? Can they be moved from task to
task?
Financial risk – does the individual get paid based on the speed/quality of their work, or just a set
hourly/day rate regardless of the time taken?
Mutuality of obligation – does the engager have an obligation to provide work and pay for it, and in
turn does the individual have an obligation to personally do the work
Integration into the organisation – is the individual part and parcel of the engagers organisation?
Do they have an engagers email address/phone number?
Provision of equipment – does the individual provide any equipment themselves?
Benefits provided – are they entitled to any benefits or invited to events that employees attend?
Contract length – has this individual been engaged by the engager for a significant period of time?

The answers to these key indicators will then dictate whether an individual will be inside IR35, therefore a
deemed employee of the engager, or outside of IR35.
Any assistance you can give the engager in this process will be greatly appreciated as we will be required to
gather evidence for the reasons behind our status decision and communicate that to the worker.

 
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