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IR35 – Seeking out employment relationships

With the new IR35 regime coming into force for medium and large companies in the private sector from April 2020, it is helpful for us to look at how the regime has been implemented and adjudicated on in the public sector, where it has been in force since 2017. The case of Paya Limited and others v HMRC [2019] UKFTT 0583 (TC) shows us that the application of the relevant tests to real-life scenarios can be extremely difficult. So much so, even the panel of the First Tier Tax Tribunal (FTT) could not come to a unanimous decision.

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IR35 – Seeking out employment relationships

Draft IR35 legislation published along with HMRC’s response to the consultation earlier this year

HMRC has published draft IR35 regulations (to come into effect on 6 April 2020) and a summary of the responses received during the consultation process. With the draft legislation and consultation response paper, HMRC has provided additional information on how the extension will operate.
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Draft IR35 legislation published along with HMRC’s response to the consultation earlier this year

Update – Employer NICs on Termination Awards

On 25 April 2019, the National Insurance Contributions Bill was introduced to Parliament. The Bill deals with the national insurance contributions (NICs) treatment of termination payments made by employers to employees in connection with the termination of employment.
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Update – Employer NICs on Termination Awards

HMRC issues guidance on preparing for changes to off-payroll working in the private sector (IR35)

As we flagged on this blog back in March (post here), a consultation is currently open on implementation of the extension of the IR35 rules on deducting tax and National Insurance contributions at source to medium and large private sector organisations which engage individual contracts via intermediaries.

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HMRC issues guidance on preparing for changes to off-payroll working in the private sector (IR35)

What is the IR35 regime and why does it matter?

The IR35 regime was introduced by HMRC to avoid individual contractors escaping paying tax as an employee by operating through a personal service company.
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What is the IR35 regime and why does it matter?

Taxation of termination payments: employer NIC charges further delayed to April 2020

In the 2016 Budget, the government announced that termination payments over £30,000 would be subject to employer Class1A national insurance contributions (NICs) from April 2018. Termination payments over the tax-exempt threshold of £30,000 are currently only subject to income tax. In the 2017 Budget, the government announced that this change would be delayed for a year and take effect from April 2019.

However, in the Autumn 2018 Budget earlier this week, the government announced that this change will be further delayed. Subject to any further postponements, employer NICs on termination payments over the £30,000 threshold will now become payable in April 2020.

Whilst most termination payments fall below £30,000, for employers this announcement will come as a welcome, albeit temporary, reprieve from additional costs in those cases where the tax-exempt threshold is exceeded.

Taxation of termination payments: employer NIC charges further delayed to April 2020