IR35 & Self-Employment Guidance

Guidance Note on Employment, Self-employment, and IR35New

GN.IR35.02A

This Guidance Note: Employment, Self-employment, and IR35 provides an overview and explanation of the differences in law between an employee and a self-employed person, and the impact of the IR35 rules on the use of a personal services company (PSC) by a person providing services to a business.

Section C of this Guidance Note takes full account of and explains the Government’s current proposals to amend the IR35 legislation by means of a new Finance Act. The Government intended to bring the changes into effect from 6 April 2020 but in view of the Covid 19 outbreak, it announced on 16 March 2020 that the changes will now only be brought in with effect from 6 April 2021. In the interim, the Government will review its proposed changes and, as a result, it might alter them. It is not possible to say for the time being whether there will be any significant or other alterations to the proposals.

This Note has consequently been updated on the assumption that no significant alterations will be made to the proposals as they stand. However, if the proposals are altered at any time after 16 March 2020, we will promptly amend this Note if necessary and notify you about the alterations. In the interim, in order to have adequate time to prepare for the changes, it is sensible to assume that the current proposals will not be altered and will take effect from 6 April 2021. If those changes will or might affect you, we strongly recommend that you take the preparatory steps which we have suggested under paragraph 5 of Section C of this Note (“Impact of changes to IR35 on your business and action needed now”), and take professional advice, to cater for the forthcoming changes.

We also recommend that you read this note before deciding which of our various template agreements will be most suitable for you to use when engaging an individual or a company to provide your business with any services.

The note contains guidance on why, for tax and employment law purposes, it is important to consider whether a person is in law an employee or a self-employed individual, how to decide whether a person is an employee or a self-employed individual, and whether the IR35 rules apply where you engage a worker to provide services to your business through an intermediary company.

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