Final legislation setting out changes to how IR35 is operated in the public sector was released on 20th March 2017 and will be enforceable from 6th April 2017. Obviously, this hasn't given public sector contractors, agencies and clients much time to prepare for any changes the final legislation has brought, but PayStream is here to support you every step of the way.
Under the new IR35 public sector rules, where a contractor works within the scope of IR35, the public authority, agency or third party paying the PSC ("fee payer") is responsible for deducting tax and Primary National Insurance Contributions (NICs) from the payments it makes to the PSC. It must also pay employer's NICs and the Apprenticeship Levy.
Public sector PSCs caught by IR35 are able to set against its own employment tax and NIC liability in the tax year, an amount equivalent to the employment tax and NIC deducted from payments to it from the fee payer. Our Accounts Team are on hand to offer advice to My PSC and PSC Online contractors who need support.
HMRC have been working on a new Employment Status Service (ESS) tool. The tool asks a series of questions about the working relationship between the contractor and client. When all the questions are answered, it gives HMRC's view on whether IR35 is likely to apply to a particular engagement and whether a contractor should pay tax through PAYE on the engagement. This can be used by both public and private sector contractors to check on their likely IR35 status. The ESS tool is anonymous - no personal details about the contractor, agency or client are required. HMRC will stand by the result unless a compliance check finds the information provided is not accurate.
Our IR35 review services are designed to help you assess your IR35 status. We gather detailed information on the contractor's circumstances via our IR35 Working Practices Review Form and review the contract(s) in place. If you feel you need an IR35 review at this time, please take a look at our webpage or email us at IR35@paystream.co.uk.
Our IR35 review service is available to both PayStream and non-PayStream accounting customers, so if you feel you have a colleague you feel could benefit from our IR35 Review service, refer them today and earn yourself 2 extra additional prize pot loyalty points!