HMRC Announces Update to IR35

12 months ago

HMRC has confirmed that IR35 will only come into play for services that are provided on or after 6th April 2020. Until now, these rules have applied to any payment made on or after the 6th April, irrespective of when the service was carried out. 

Changes to IR35 

The new update was made on 7th February, following concerns over which types of payments will be affected and when. As a result, the government has decided to allow businesses more time to prepare for the IR35 reform by ensuring that the change will only apply to payments for services that are provided on or after the 6th April. 

According to the government’s official statement, the aim of this change is to allow businesses to ensure they can implement the changes to the IR35 rules in a “smooth and successful” way from 6th April 2020 onwards. 

So what actually is IR35? 

IR35 is the UK’s anti-avoidance tax legislation which is designed to prevent freelancers, contractors and the companies they work for from avoiding tax or paying less tax than they should be. 

The term is used to describe the following pieces of legislation:

  • The Intermediaries Legislation (Chapter 8 of ITEPA) 
  • Off-Payroll tax rules (Chapter 10 of ITEPA) 

IR35 legislation applies to those who behave like employees, but use an intermediary (such as their own company), which results in them paying less tax. 

For a full detailed guide explaining how to find out your IR35 status, what to do if you think you’re affected and how this legislation could affect you and your business, head over to our recent post ‘IR35 – A Guide for Freelancers’. 

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