Get ready for April 2021. We have created this page as many clients have been asking us about this, as they keep hearing this in the media and not sure what it is. We have created this page to answer various random questions.
IR35 is shorthand for the UK tax legislation that is designed to identify contractors and businesses which are avoiding paying the appropriate tax by working as ‘disguised’ employees, or are engaging workers on a self-employed basis to ‘disguise’ their true employment status. This comes in from April 2021. Click here for the government website
What does this mean in simple English?
If you have a Worker who is working in your business, doing a job that is classed as a Employee, all but in name. They then need to be paid on a payroll.
Does this include Relief workers?
Yes. If they are doing a job classed as a Employee they will need to be paid via a payroll. This can be your payroll or a agency payroll. You will need to know how the Agency is paying your workers. If they full under IR35 and paid via a invoice not payroll, you could be liable.
Why the change?
IR35 is to make tax the same, if two workers are sat next to each other in the office, doing the same work, they would need to be both treated the same for Tax. Say if you have two Warehouse team leaders, again both need to be on PAYE. If you employ a Chef or Waiter, again most Relief Hospitality roles in most cases these would full under IR35. The tax could be paid via a Umbrella PAYE, Agency PAYE or a Company PAYE.
For Chefs, a Chef Relief agency have created this video that explains IR35 for Chefs really well. This other Temp chef agency explains it well
IT contractors is the most complex, alot of other roles above can be very clear cut on the duties etc however with IT contractors this can be more complex. Always do a IR35 check on your IT workers
What makes someone full under IR35
At the time of writing this page, based on a assessment just done on the .Gov website, the following would mean someone would full under IR35 & need to be paid via payroll:
- They are told the hours they need to work
- They are told how to do the work
- The items needed to complete the work are purchased for them
- They are told the rota required
Ways to be paid?
- On your pay roll system
- On a Agency payroll system
- On a 3rd party payroll system, called a Umbrella company
Do I need to ask the Agency how they are being paid?
Yes. Under IR35, you need to be aware how a agency is paying your workers. You will need confirmation on email or in writing to confirm they are not paying via invoice
Will this be the end to Relief workers?
No, not at all. HTE Recruitment do not do Relief work however their is a massive need for Relief workers for so many reasons. This will not be the end to Agency work or Freelance work. IR35 will only change how the worker is paid and will stop them being paid via a invoice, BACS or cash!.
What do I need to do?
- Do the online assessment to see if the work being done wall full under IR35.
- Keep a copy of a results of this, you will need this for HMRC
- If you use a Agency, get in writing how the worker is being paid and keep a copy of this
- If you have your own bank of freelance workers, you will need to speak to them about being on your payroll and you could show them the IR35 results from the online assessment
- Keep records of everything, like with most tax things, It can go back 6 years. Keep all your records.
When does this start?
April 2021 (delayed from April 2020)
How do i prepare for April 2021?
In advance of IR35, do make sure you work out if your relief workers need to be paid on or off payroll, using the HMRC website. If they do & they are currently paid via a invoice, it is best to explain to them in advance. If they are from a Agency, have the documents ready and get in writing how the workers are going to be paid. Every sector is different, so how you do this chat will depend on your sector
How can I check if my relief worker needs to be paid via a payroll
At the time of writing this, This is for medium and large companies (over 50 employees) This can be a Agency payroll or a umbrella payroll. They just can not be paid via a invoice or cash. Watch this video from another agency that explains it well, Click here for a government online form to check the status. We would strongly suggest to keep a copy of the results, incase you are audited.
We are a Perm agency, the above is not the end to Temps at all. Relief workers are a massive part of the UK job market and they fill gaps for many many companies. Their are so many fantastic Relief Agencies who can support you find Temp workers to fill your gaps. IR35 will make Tax fair & it will also give workers more benefits like Holiday pay, sickness, Furlough if in a lockdown again etc etc.
[always get your own advise from your accountant on IR35, this is a guide only and HTE do not take any responsibility for the above information. This is not a legal document, this is just a news story based on information on the Government website. We take no responsibility for any information and always do your own research. This page has only been produced to help our clients from our six sectors, who keep asking us about this. We do not cover Relief workers however we have good relationships and clients are asking us about it. HTE Recruitment do not take on any Relief workers or Contracts, we are perm only]