Budget 2018: IR35 rules change for private sector

31st October 2018

The Autumn Budget 2018 confirmed that many private sector contractors will no longer be responsible for deciding if they are caught by the IR35 rules. Engagers who are medium or large organisations will now decide the IR35 status of the PSCs they contract with.

What will constitute a medium or large organisation?

It is not yet known how the government will define this. The UK Companies Act 2006 definition is 50 employees or more, turnover of £10.2 million or assets of £5.1 million. Contractors will need to ask engagers about the size of their business to decide who is responsible for determining IR35 status.

When do the new rules start?

The Chancellor, Philip Hammond, has delayed the changes until April 2020 to allow time for the government to review the impact of Brexit and consult on the implementation of the rules. HMRC will be able to review and improve the CEST (Check Employment Status for Tax) tool.

The good news

HMRC has confirmed that they will be focusing on future compliance and not looking at previous tax years. If an engager decides that a contract is caught by IR35, this will not automatically trigger an enquiry into how the contract was previously treated.

More information about the Autumn Budget 2018 can be found in our Budget summary:

 

https://www.whitingsllp.co.uk/wp/wp-content/uploads/2018/10/Autumn_Budget_2018.pdf

 

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