The IR35 reform came into play for both the public and private sectors on 6th April 2021. Here at DataCareers we’re often asked about the changes to IR35 and what those changes mean, so this article aims to reassure you that we have experts in place, ready to help you through the process.
If you work on a contract basis, or hire contractors as well as permanent employees, the changes to IR35 legislation apply to you – and it’s important that you know where you stand.
What is IR35?
First implemented in April 2020, IR35 has been a significant aspect of business for anyone who works or recruits via contracted terms; it is the tax legislation assigned to those who aren’t permanent employees, or who are employed via an ‘umbrella’ company. Until now the individual determined their own status, whether they were permanently employed or contracted.
What are the changes?
This aspect of the legislation is what has changed. It now means that individuals are no longer responsible for determining their own status- instead this will be determined by the contractor.
Why has IR35 legislation changed?
These changes have been necessary to counter the fact that some individuals have claimed to be working as contractors, benefitting from the reduced Tax and National Insurance payments, but are actually performing the role of a permanent employee.
These ‘hidden employees’ have been taking advantage of IR35 as a tax loophole, paying smaller tax bills based on lower salaries and dividend payments. They will now fall under IR35 and will need to pay Income Tax and National Insurance contributions as such.
How can we be sure we get it right?
Working in the talent solutions industry we partner with many businesses globally, who rely on contracted teams to complete projects. We recruit the individuals who make up those contracts, bringing their unique expertise and specific skills together to create high performing teams. This gives us significant insight into the impact these changes to IR35 will have, if you get it wrong.
Here at DataCareers, the team take pride in our specialised recruitment solutions, and in providing innovative and cost-effective options for businesses with a variety of recruitment priorities. All of our services are designed to ensure that your organisation is able to plan for the future, achieve your projects with the best team in place, and protect you.
As part of our service, we offer an IR35 online tool, which helps you to determine the appropriate status for every individual you employ – whether permanent or contracted. Creating efficient and detailed records, not only meeting your compliance requirements but also supporting you should there be any dispute, this tool ensures that you and your team are categorised correctly and face no risk of future penalties.
Though the new legislation is now law, Government have announced that any penalties will be frozen for the first 12 months, where inaccuracies are identified, unless there is evidence of deliberate non-compliance. Beyond this point there is no cap on the fines you could incur, depending on how many incidents of non-compliance are found.
Protect yourself against this risk by partnering with talent acquisition experts who understand the technicalities, can guide you through that process, and can ensure that you accurately comply with these changes. Contractors can continue to provide the best solution for specific projects, and employers benefit from the reassurance that their compliance protects against future expense.
If you want to discuss anything IR35 related, contact the DataCareers team directly on 0121 828 9172 or email james.crawford@datacareers.co.uk to hear back from one of our talent specialists.
