IR35 Rules Changing in 2020 - Get Ready Now

15th April 2019

IR35 is a piece of legislation designed to tackle tax avoidance from 'disguised employment' - where self-employed contractors set up limited companies to pay themselves through dividends, which are not subject to National Insurance. It was first introduced in 1999 by then-chancellor Gordon Brown.

The new rules will not apply to small companies (end clients) as defined by the Companies Act:

Annual Turnover of less than £10.2 million

Balance sheet total less than £5.1 million

Number of employees less than 50.

If an end client does not have at least two of these characteristics, the rules will not apply, and the personal service company will remain responsible for determining the IR35 status of its contracts with an end client.

The government is consulting on how these rules will be applied to non-corporate entities such as the public sector and charities. It is proposing the following options:

Entities with 50 or more employees

Entities with turnover exceeding £10.2 million.

Entities that have both 50 or more employees and turnover in excess of £10.2 million.

A government consultation is underway and closes on 28th May 2019. See Off-payroll working rules from April 2020

What is IR35? - If you are unsure go HERE