Published: 09/03/2017 By Hannah McCormack
With effect from 6th April 2017 there will be changes to IR35 tax system which will impact upon many people who supply their services on a self-employed basis to public sector employers. It will mean that the duty for making sure those who work for a limited company pay the correct level of tax and National Insurance will change from individuals to employers and agencies.
The announcement made by the Chancellor during his 2016 Budget speech was that “Public sector organisations will have a new duty to ensure that those working for them pay the correct tax rather than giving a tax advantage to those who choose to contract their work through personal service companies.”
The IR35 changes do not apply to the private sector or those employees on the payroll but will apply to agency workers such as those in the NHS but it appears that the changes are already impacting upon many in the public sector who previously operated using these personal service companies. It has been stated that the purpose of the change is to deal with the deemed widespread non-compliance that has occurred. Many workers will find that they have not set aside sufficient funds to account for their tax liabilities and the usual result is that it will create an overdrawn director loan account with a balance repayable to the company.
If you are in this position then it is important that you seek advice as soon as possible on the appropriate route forward. Turpin Barker Armstrong has experience in dealing with these circumstances and will happily go through you situation at a time convenient for you. We always offer the first meeting free of charge with no obligation to sign up so please contact us here
Alternatively if you need any advice from an accountant please contact us here