IR35 (Off-Payroll Working Rules)

What is IR35?

The off-payroll working rules - commonly known as IR35 - is designed to combat tax avoidance by workers supplying their services to clients via an intermediary i.e. a limited company.

HMRC refers to such workers as 'disguised employees' as the worker doesn't meet HMRCs definition of self-employment and therefore the correct tax and national insurance isn't paid correctly.

More information can be found here: https://www.gov.uk/guidance/understanding-off-payroll-working-ir35

What's new in this legislation?

From April 2021 (originally scheduled for April 2020), the responsibility for assessing whether IR35 applies will shift from the individual to the end client. If the role is determined inside IR35, whoever the fee payer is will be responsibility for deducting the relevant Tax and NI contributions before paying the LTD Company.

The government announced that small organisations will be exempt from these changes. Meaning that workers engaged in contracts with 'small businesses' will remain responsible for determining IR35 and not the client/agency.

How can I record IR35 in Firefish?

There are a few really easy steps you can take to prepare your Firefish database for this new legislation, ensuring your recruiters can record whether a contractor falls inside or outside IR35: