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UK – Government releases guidelines for intermediaries on IR35 off-payroll working rules

22 August 2019

Guidelines covering “off-payroll working rules,” or IR35, and what it means for intermediary companies was released Thursday by HM Revenue and Customs.

IR35 is defined in Staffing Industry Analysts’ Lexicon as:

“UK intermediaries legislation designed to tax “disguised employment” at a rate similar to employment. In this context, ‘disguised employees’ means workers who receive payments from a client via an intermediary and whose relationship with their client is such that, had they been paid directly, they would be employees of the client and, therefore liable for tax and national insurance payments.”

The HMRC’s guidelines aim to help intermediaries understand and prepare for IR35.

“From 6 April 2020, all public sector clients and medium or large-sized private sector clients will be responsible for deciding your worker’s employment status. This includes some charities and third sector organisations,” the guidelines state. “If the off-payroll working rules apply, your worker’s fees will be subject to tax and National Insurance contributions.”

They noted that an intermediary will normally be a worker’s personal service company, but could also be a partnership, a managed service company or another person.

For more information on IR35, Staffing Industry Analysts released a report on frequently asked questions regarding the new rules in June, and it’s available to corporate members.

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