Until now working with contractors, freelancers and others off payroll who operate through a personal services company has been relatively low risk. This is because they were responsible and liable for their employment status, tax and national insurance, not you (i.e. if the law or HMRC disagreed).
But this is changing from 6th April 2020.
From 6th April 2020 you will have to make this assessment and decide whether a person is genuinely self-employed. If not, and there’s no other intermediary like an employment agency involved, you will be responsible for deducting tax and national insurance contributions.
What to do now:
- Check whether you are affected – only small companies (< 50 people meeting certain criteria re turnover and assets) will be exempt.
- Review your use of contractors, freelancers and others off payroll (including non-exec directors, etc) – could some of them be considered employees (for example they work solely for you, use your equipment, work from your offices, etc.)? And ensure you have a process in place to make this assessment in future.
- If you think any could be considered to be employees start to map out the options now. Do you want to employ them? What will this cost? Check their contracts. Do you need to negotiate new terms?
We’re here to help. If you have any questions or want to discuss your situation with us in more detail send us an email today.
You may also want to check out guidance from the HMRC on preparing for iR35 here.