IR35 is one of the hottest topics in the UX industry today. Now the IR35 ‘off payroll’ rules in the public sector are being extended to the private sector for large and medium-sized businesses from April 2020, we’ll see big changes.
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 are changing again.
What changes in April 2020?
After April 2020, responsibility will shift from the contractor to the company engaging them. There was chaos when the ‘off payroll’ rules launched in the public sector in 2017, and we could be in for more confusion ahead of the new deadline — many large organisations aren’t renewing contracts before the rules come in.
We’re already thinking ahead about how the new IR35 rules will affect our business.
The change will affect 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
As a company who embeds and manages UX teams within companies, we’re in a perfect position to support our medium and large clients through these challenging times.
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 can 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 set to lose out through IR35 changes, ask us about how we can help you.