IR35 is one of the hottest topics in the UX industry, following the change to the IR35 ‘off payroll’ rules for large and medium-sized private sector companies we are seeing lots of changes to the way companies are engaging with UX contractors.
What is IR35?
IR35 describes two sets of tax legislation designed to combat tax avoidance by workers, and the companies hiring them. It applies if they are supplying their services to clients via an intermediary, such as a limited company, when they otherwise would be an employee.
HMRC refers to such workers as ‘disguised employees’ as the freelancer or contractor doesn’t meet HMRC’s definition of self-employment. That means the correct National Insurance Contributions (NIC) and income tax aren’t always paid correctly. Now, the rules have changed again.
What changed in April 2021?
After April 2021, responsibility shifted from the contractor to the company engaging them. There was chaos when the ‘off payroll’ rules launched in the public sector in 2017, and this confusion has also happended in the private sector — many large organisations didn’t renew contracts when the rules came in, instead expecting contractors to work under umbrella companies.
The change affects medium and large private sector businesses only, meaning that companies like The UX Agency are exempt, as long as they meet the following criteria:
Annual turnover: Less than £10.2 million
Balance sheet total: Less than £5.1 million
Number of employees: 50 or less
How we remove the IR35 challenges for you
We’re now supporting many of our medium and large clients to continue to embed UX teams internally without having to employ permanent employees.
To protect ourselves and our clients, we can guarantee that all of our associates work within the following criteria:
Project based contracts and charging
Ability to substitute contractor with client agreement
Schedule set by contractor
Through a close relationship with our associates, we make this approach work effectively for a number of our large clients, removing the challenges of IR35 and helping them engage with some of the best UXers in the market.
If your company is looking to bring UX teams in-house, get in touch to find out how we can help you.