IR35 Legislation – Important Changes Effective from 6th April 2021

In 2017, HMRC implemented changes to the IR35 legislation that affected the way people working for the NHS and other public bodies were taxed. This affected candidates working via PSCs/limited companies.

Last year, HMRC planned to introduce changes to the IR35 legislation, similar to those introduced into the public sector in 2017. This change was postponed due to Covid-19

This legislation change will be rolled out to private sector employers from 6th April 2021.

Roles that fall within IR35 are subject to PAYE income tax and National Insurance contributions. There are a few important things you should know about the recent changes:

  • The end user client will now determine whether or not a role falls within IR35.  
  • An exemption exists for private sector employers who qualify as small companies and for these it will remain the responsibility of the contractor to determine their IR35 status.
  • For roles falling within IR35, it will be necessary, should workers wish to continue being paid via their limited companies, to deduct tax and NICs at source, prior to payment being made (similar to PAYE).
  • These changes will apply to all shifts worked on or after 6th April 2021.
  • Subject to individual trusts’ agreement, you will still be able to be paid via a PSC, but most of the current tax benefits will be lost.

What is ID Medical Group doing about IR35?

It is likely that, for many candidates, these changes will increase Income Tax and National Insurance liability. As a result, we’re:

  • Working with a number of PSC and umbrella providers to explore what terms could work best for you moving forward.
  • Working with our clients to minimise any impact to your pay.
  • Liaising with our industry lobbying group to ensure your best interests are represented to Government.

Guidance provided requires that each role should be assessed individually, and whilst end user clients should not be able to apply a blanket IR35 rule, we do expect that most roles will fall within IR35 after assessment.

Please be aware that this legislation will affect every client other than those qualifying as small companies, and every agency supplying staff to both private and public sector clients. If you have questions about your specific situation with relation to IR35, we recommend seeking the advice of an accountant with IR35 experience.

Additional Helpful Links

Getting paid: https://www.id-medical.com/candidates/getting-paid/

Umbrella Companies: https://www.id-medical.com/candidates/getting-paid/umbrella-company

Limited Companies: https://www.id-medical.com/candidates/getting-paid/ltd-company