Last month’s budget announced changes to the application of IR35 for those working as contractors through their own limited companies. The changes will be similar to those applied to contractors working in the public sector in April 2017.
It means the onus of deciding if a contractor would be an employee but for limited company will be on the end client. There is expected to be some exemptions where the end client is a small business however the detail is not yet known.
The consequences are that many contractors operating through a limited company and structuring their drawings in a way which benefits their circumstances will be taxed at source by the client under PAYE as if they were an employee.
The detailed rules are not expected to be available until summer 2019 and they won’t be implemented until April 2020 but it is advisable to consider your contracts in the coming months and be prepared for the changes.
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