In April 2021, off-payroll working rules will be extended to the private sector. This may give your business some new responsibilities to consider.
What is IR35?
What is IR35?
IR35 is a piece of legislation that was introduced in 2000 as a way of tackling ‘disguised employment’ and taxing contractors at a similar rate to a company’s employees.

On 6th April 2021, IR35 rules will change to cover PSCs (Personal Service Companies) in the private sector. If your business engages contractors, temps, or any other workers who are not on your payroll, you will need to establish how the new rules affect you.
Businesses engaging contractors via PSCs will become responsible for:
  • Determining each contractor’s tax status (i.e. does IR35 apply to them?)
  • Delivering this verdict to the contractor
  • Ensuring that all relevant taxes and NICs are paid by the PSC and contractor
This applies to all engagers of PSC contractors, although HMRC have confirmed that small businesses (with a turnover under £10.2 million, a balance sheet total under £5.1 million, and fewer than 50 employees) will be exempt from the changes.
  1. 1
    First, make a list of your ‘off-payroll’ workers. How many PSCs (Personal Service Companies) are there? Related categories include sole traders and the self-employed.
  2. 2
    Compile year-end dates. Segment your list by year-end date.
  3. 3
    Complete the vitality rating to establish how vital each contractor is to your business.
HRS offer an auditing solution (both onsite and remote) to ensure your business is aware of the predicted status of each of your current PSC contractors. We can also provide easy-to-use templates to help you complete the steps listed above.
How do I Determine Employment Status?


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For more information on IR35 and these new changes, please enter your details and we’ll email you our PDF guide.


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Useful Links

Official link to the guidelines
FCSA Accredited member for Umbrella companies (if determined inside IR35)
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