Main changes to IR35 effective from 6 April 2020
The changes to IR35 made by the Finance Act 2020 are effective from 6 April
2020. A freelancer who works through a PSC, and any business or other
organisation that engages freelancers through a PSC, needs to be aware of
these IR35 rule changes .
Until April 2020, if a PSC’s client was in the private sector, the PSC, not
the client, had to identify whether its receipt of gross payments from a
client was caught by IR35 as “disguised employment” and if so, the PSC had
to pay tax and NI under PAYE.
As from April 2017 if the client is in the public sector, the client has to
identify whether there is “disguised employment”. In other words, as from
April 2017, the tax risk has moved from the PSC to the public sector
client. As from 6 April 2020, that risk has also moved from the PSC to its
private sector client except where the client is classified by IR35 as
If the client is in the private sector, it is “small” if at least two of
the following apply. (This exception does NOT to apply to a public sector
client): its annual turnover is less than £10.2 million; its annual balance
sheet total is less than £5.1 million; its employees number less than an
average of 50 in the year.
The size of the PSC and other intermediaries is not relevant for these
If the client’s determination is that there is “disguised employment”, it
must operate PAYE and the remuneration it pays the PSC must be paid net of
tax and NI. If the client determines that it is genuine self-employment,
the client can pay the PSC the gross remuneration.
If, apart from the PSC there are one or more other intermediary entities,
and the entity paying the PSC is not the PSC’s client, the payer must
instead operate PAYE and make payments net. Please see the next page about
information and other IR35 requirements effective from April 2020.
Please also read our Guidance Note (which you can see here) for further detail of all 2020 changes.