Contractors working in the private sector may soon come under IR35 rules after the Government announced a consultation looking at ways to increase compliance with existing “off-payroll” working rules.
These rules will focus on contractors – such as IT and management consultants – who work through their own company but are in practice employed by a third party and should be paying income tax and national insurance contributions at source.
Similar rules came into effect in April last year, although these only extended to the public sector. The change, which reportedly increased tax revenue by around £410 million, heavily impacted on organisations such as the BBC.
It was reported that hundreds of on-screen stars who had paid themselves through Personal Service Companies (PSCs) were asked to pay back tax due.
Financial Secretary to the Treasury, Mel Stride, said: “It’s very important that we recognise the hard work of contractors across all sectors, who contribute to our growing economy.
“But it’s also right that we have a fair tax system that balances efficiency and simplicity for taxpayers, while also supporting our vital public services.
“That’s why we’re consulting carefully and welcome a wide range of opinions and evidence on how to tackle non-compliance.”
For more information on how these changes might affect you, please get in touch.