IR35 Freelance Tax Changes Confirmed for April 2021

IR35 Freelance Tax Changes Confirmed for April 2021

We’ve now published a more up-to-date version of this article since the new IR35 changes came into place – How Will the New IR35 Freelance Tax Changes Affect Me?

IR35 reforms were set to take place in April this year, affecting freelancers in a variety of industries and sectors. However due to the effects of the Coronavirus pandemic, the government has now decided to defer these changes for 12 months. This means that the new changes won’t come in place until 6th April 2021. 

As mentioned in our previous article ‘HMRC Announces Update to IR35’, this reform is intended to prevent freelancers, contractors and the companies they work for from avoiding tax or paying less tax than they should be. 

What changes will be made to IR35 from 6th April 2021?

The government has announced that the off-payroll working rules will be changing in the following way: 

Public sector rules will remain the same

Currently when a worker provides services to a client through you, the client must decide your employment status. 

After the reform in April 2021, this rule will remain the same for those in the public sector. 

Private sector rule changes 

Currently in the private sector, when a worker provides services to a client through you, you must decide your worker’s status.

However after the reform on the 6th April next year, all companies (apart from those with less than 50 employees or less than £10.2m annual turnover) will be required to assess the employment status of anyone they hire who works through a limited company.

If you’re unsure about whether or not you’ll be affected by these changes speak to a tax lawyer or an accountant. They’ll be able to advise you based on your individual circumstances. 

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