[UK] Ahead of IR35 52% of contractors yet to have tax status assessed

[UK] Ahead of IR35 52% of contractors yet to have tax status assessed
14 Jan 2021

A study has found that over half of the UK employers who use contractors remain unprepared for the changes to private sector off-payroll rules due to come into force this April.

A poll of more than 3,000 contractors by IR35 Shield has revealed that 52 per cent of those currently in work had not had their tax status assessed, despite employers being given an extra year to prepare for the changes to IR35 after the transition was delayed because of the pandemic.

If a contractor is deemed to carry out similar or the same work as a permanent staff member, under IR35 off-payroll rules their employer is required to deduct income tax and national insurance contributions as if they were an employee. The legislation was introduced to ensure that workers undertaking similar roles paid the same tax regardless of their employee or contractor status.

Changes to the rules, shifting responsibility for deciding whether contractors fall ‘inside’ or ‘outside’ IR35 to the employing businesses were due to come into force in the private sector this year, bringing it in line with the public sector before the COVID-19 pandemic prompted a pushback. But now the April 2021 rollout date is fast approaching. People Management reports on the poll results with reactions from experts.

A study has found that over half of the UK employers who use contractors remain unprepared for the changes to private sector off-payroll rules due to come into force this April.

A poll of more than 3,000 contractors by IR35 Shield has revealed that 52 per cent of those currently in work had not had their tax status assessed, despite employers being given an extra year to prepare for the changes to IR35 after the transition was delayed because of the pandemic.

If a contractor is deemed to carry out similar or the same work as a permanent staff member, under IR35 off-payroll rules their employer is required to deduct income tax and national insurance contributions as if they were an employee. The legislation was introduced to ensure that workers undertaking similar roles paid the same tax regardless of their employee or contractor status.

Changes to the rules, shifting responsibility for deciding whether contractors fall ‘inside’ or ‘outside’ IR35 to the employing businesses were due to come into force in the private sector this year, bringing it in line with the public sector before the COVID-19 pandemic prompted a pushback. But now the April 2021 rollout date is fast approaching. People Management reports on the poll results with reactions from experts.

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