UK Chancellor Philip Hammond is expected to announce that IR35 rules, which have applied to public sector contractors since 2016, will be extended to the private sector when he presents his Budget on 29 October.
There has been much speculation on the subject recently, following a government consultation that ended in August. According to People Management, experts warn the move could lead to practical and financial burdens for HR and payroll departments.
Under the IR35 regulations, hiring organisations are responsible for determining the tax status of ‘off payroll’ workers. This has meant large numbers of public sector freelancers and contractors have had their national insurance deducted via PAYE, while their employers have been required to make national insurance contributions.
Treasury figures suggest one in three workers who use personal service companies to bill employers should actually be classified as employees. The resultant lost tax take is predicted to grow to £1.3bn (US$1.7bn) a year by 2023 if the system is not changed.
Meanwhile, Her Majesty’s Revenue & Customs (HMRC) has asked public sector employers to provide the personal details of contractors who work outside IR35 via limited companies, according to ContractorCalculator. They have reportedly been sent a letter asking them to provide their names and addresses.
Gill Oliver is a business and property journalist who has written for The Daily Mail/Mail Online's This is Money, The Press Association and many national and regional newspapers and magazines.
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UK Chancellor Philip Hammond is expected to announce that IR35 rules, which have applied to public sector contractors since 2016, will be extended to the private sector when he presents his Budget on 29 October.
There has been much speculation on the subject recently, following a government consultation that ended in August. According to People Management, experts warn the move could lead to practical and financial burdens for HR and payroll departments.
Under the IR35 regulations, hiring organisations are responsible for determining the tax status of ‘off payroll’ workers. This has meant large numbers of public sector freelancers and contractors have had their national insurance deducted via PAYE, while their employers have been required to make national insurance contributions.
Treasury figures suggest one in three workers who use personal service companies to bill employers should actually be classified as employees. The resultant lost tax take is predicted to grow to £1.3bn (US$1.7bn) a year by 2023 if the system is not changed.
Meanwhile, Her Majesty’s Revenue & Customs (HMRC) has asked public sector employers to provide the personal details of contractors who work outside IR35 via limited companies, according to ContractorCalculator. They have reportedly been sent a letter asking them to provide their names and addresses.
Gill Oliver is a business and property journalist who has written for The Daily Mail/Mail Online's This is Money, The Press Association and many national and regional newspapers and magazines.
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UK contractor wins employment status case against HMRC
Waters further muddied around UK's IR35 contractor regulations
What will extending off-payroll tax rules to the UK private sector mean?
