The IR35 tax legislation was introduced as a means of distinguishing between employees and self-employed contractors. Here's a short guide to help you navigate the changes set to be implemented in the private sector from April 2021.
After 6th April 2021, the off-payroll working rules in the private sector will change - IR35 legislation will be implemented, and your working practices will be reviewed. Instead of you being responsible for determining IR35 status, this obligation has been handed to the engager of each contractor, i.e. the client. The client will complete an online assessment using a comprehensive tool we have built under the guidance of a leading provider.
If you are deemed to be inside IR35, this means that by HMRC's metrics, how you perform your current job is similar to that of an employee, and therefore you should be paying the same amount of tax. As such, from April, how you pay your tax and National Insurance contributions will be affected. If you have
been operating as a PSC contractor, you will now be subject to different processes.
There are two simple options...
At La Fosse, there are two distinct options to choose from, in order to continue working with your client and ensuring your tax and NI deductions are calculated appropriately.
Option 1 - Using an umbrella company
If you choose to work with an umbrella company, they will deduct your NI and tax on your behalf then pay you for the remainder, which is approximately 60% of your take-home pay.
At La Fosse, we only work with accredited umbrella companies. This is to ensure that we know for certain that they are compliant with the latest
HMRC regulations and in line with the Criminal Finances Act 2017. There are over 200 accredited umbrella companies you can choose from, all of
which have been certified by the relevant professional bodies: FCSA, APSCO, PRISM and Professional Passport.
Do not be tempted by umbrella companies offering you 70-90% take-home pay. They are offering these services illegally and HMRC are in process of
closing these companies down.
We have compiled a PSL of recommended umbrella companies that are fully vetted and accredited - the majority currently work with us, and you can rest assured that they all hold the same high levels of good customer serve and culture as we do. Please get in touch if you require access to this list.
Option 2 - Using an IR35 fee payer solution
Similar to how an umbrella company works, a fee payer solution will take responsibility of your NI and tax deductions whilst still allowing you to continue contracting via your limited company. La Fosse has partnered with a leading provider to offer an easy-to-use service to our contractors, which includes personal access to an online portal to view invoices and remittances.
How La Fosse can help...
If you would like to get in touch regarding further advice on IR35 and how it may affect current or future contractors, please contact your relevant consultant or Katherine via the below channels: