IR35 is coming into force in the private sector on April 6^th 2021.

We speak to Cloud & IT Infrastructure contractors every single day, and there have been many questions around how IR35 is going to change the job market.

Our Contract Team Lead Lee Barham gives you everything you need to know around IR35:

“Following the introduction of IR35 reforms in the public sector in 2017, it’s been confirmed the new rules have been extended to the private sector.

As you may well know, these changes are becoming effective from the 6^th April 2021.

IR35 rules have been around for many years.

They were originally introduced in the year 2000 with the intention of ensuring that contractors who were working like employees but who operate via a PSC, or Personal Services Company, pay roughly the same tax and national insurance contributions as an employee.

So what does this mean for contractors from the 6^th April 2021?

Once the client has conducted a regulated assessment and IR35 applies, the fee payer will become responsible for accounting for and paying the related tax and national insurance. This includes the additional cost of employers and national insurance contributions to HMRC.

Once the role is deemed to be inside or outside the scope of IR35 the contractor will have to make a choice.

Does the contractor work inside IR35, where the deduction of tax and national insurance affects their earning potential?

If the role is deemed outside IR35, they simply continue to work through their PSC to manage their own tax and national insurance.

If the contractor does not have a limited company then they could work for an umbrella company who will manage the tax and national insurance payments on their behalf whilst charging for this service.

IR35 is certainly giving Cloud & IT Infrastructure contractors a lot of food for thought.”

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