Don’t worry we have it covered. Azebra have worked with specialist advisors to put together a simple summary of the changes and what you need to do:
WHAT ARE THE CHANGES?
Following the introduction of IR35 reforms in the public sector in 2017, HMRC has confirmed that the new rules will now be extended into the private sector, effective 6th April 2021. IR35 has been in place since 2000 with the intention of removing the tax advantages of providing services via a limited company for individuals who are not truly in business. However, this was largely ineffective and resulted in many limited company owners working outside the rules.
The changes to be implemented will place responsibility for the assessment of the employment status of the client. This will affect all organisations in the public sector and Medium and Large companies in the private sector. Small Private companies are exempt.
WHAT DOES THIS MEAN?
Contractors can no longer determine their IR35 status. From 6 April 2021, it will be the client’s responsibility to determine the employment status of its workers i.e. is this assignment “inside IR35”? HMRC has issued guidance and the employment status for tax (CEST) tool. If a status of inside IR35 is established the worker will need to have full tax and NIC deducted from their pay.
IR35 STATUS DETERMINIATION STATEMENT (SDS) EXPLAINED
The end-client must confirm the IR35 status of a contract by providing a ‘Status Determination Statement’ (SDS). The SDS must be provided in writing to the PSC worker and, if an Agency is involved in the labour supply chain, a copy must be provided to the Agency responsible for paying the PSC.
These arrangements place most of the responsibility for administering an SDS on the end client and/or the fee payer (if an Agency is involved)
WHAT IS CLASSED AS A SMALL COMPANY?
Small private companies are exempt from the changes to the legislation. To meet the criteria of a small company the government has indicated they intend to use the same criteria as defined in The Companies Act 2006.
• A turnover of no more than £10.2m
• A balance sheet total of no more than £5.1m
• 50 employees or less
Where the end-client meets two or more of these criteria, responsibility for determining the IR35 status of a contract remains with the PSC and the changes do not apply.
ARE UMBRELLA COMPANIES AFFECTED?
Umbrella companies employ all their workers therefore the off-payroll working rules do not apply. The legislation only covers self-employed contractors.
NON UK NATIONALS
Free Movement in and out of the UK came to an end on 31st December 2020 for EU Nationals (excluding Irish nationals who are subject to different rules).
Those wishing to work in the UK will need to show proof of a settlement status or be subject to the same visa requirements as non-EU Nationals.
WHAT IS SETTLED STATUS?
You’ll usually get settled status if you’ve lived in the UK for a continuous 5-year period (known as ‘continuous residence’).
WHAT IS PRE SETTLED STATUS?
If you do not have 5 years’ continuous residence when you apply, you’ll usually get pre-settled status. You must have started living in the UK by 31 December 2020 unless you are applying as an existing close family member of an EU, EEA, or Swiss citizen who started living here by then. You can stay in the UK for a further 5 years from the date you get pre-settled status.
You can then apply to change this to settled status once you’ve got 5 years of continuous residence. You must do this before your pre-settled status.
WHEN DO I APPLY
The rights and status of EU, EEA and Swiss citizens living in the UK by 31 December 2020 will remain the same until 30 June 2021. The EU Settlement Scheme is open. You can apply now if you meet the criteria and the application is free of charge.
The deadline for applying is 30 June 2021. You must usually have started living in the UK by 31 December 2020.
For more information and to apply go to https://www.gov.uk/settled-status-eu-citizens-families
WHAT WILL I NEED TO SHOW AS PROOF?
To prove to an employer the types of jobs you’re allowed to do and how long you can work in the UK for. You will need one of the following:
Your biometric residence permit number.
Your biometric residence card number
If you’re an EU, EEA, or Swiss citizen, you can continue to use your passport or national identity card to prove you can work in the UK until 30 June 2021.
More and more recruitment businesses are selecting the payroll provider they work with based on their accreditation with FCSA.
Accredited Membership is awarded to service providers that have been independently audited by industry experts (who are themselves regulated accountants and solicitors) to confirm that they adhere to the FCSA’s rigorous Codes of Compliance.
All members go through an extensive due diligence process, must be able to demonstrate high compliance standards within the industry, and follow the FCSA code of practice which was developed by Ernst and Young in consultation with HMRC and is updated continually to reflect the latest legislations.
By choosing to work with Azebra, an FCSA Accredited member, you can trust that all your workers are paid in line with the correct UK legislation, and statutory deductions are made and paid to HMRC.
As a recruiter, you can limit your liability ensuring you are only working with financially stable regulated payroll providers. FCSA Accreditation is the only compliance standard recognised and endorsed by all of the major recruitment industry bodies, including the REC, APSCo, and TEAM.
Azebra works with NOW:Pensions to administer our scheme. A letter explaining what auto-enrolment is, who qualifies, and how it works is included in our contractor welcome pack. We also explain what the process is for opting in early and for opting out after auto-enrolment.
AGENCY WORKERS REGULATIONS
Azebra operates a strict AWR policy, working with our clients to ensure full compliance with the legislation. We operate Matching Permanent Pay (MPP) for all workers who reach 12 weeks under Regulation 5 of the legislation.
Our payroll system monitors the length of contracts and flags any contractor due to reach the 12-week threshold.
For more information please see our guide to AWR below