Originally written by Timothy Adler on Small Business
The Government has voted through IR35 reform, which will bring millions of freelancers and contractors into pay-as-you-earn from April 2021.
IR35 puts the onus on employers to decide whether freelance contractors should pay national insurance will take effect from April 21 2021.
Contractors argue that although they will be taxed like regular PAYE employees, they will have none of the benefits of full-time staff, being both still on short-term contracts with no paid holiday.
>See also: Taxman will not fine you for getting things wrong with IR35 within first year
What is IR35 and how does it affect me?
Currently, contractors assess their own tax status, but impending reforms coming into force from April 6 2021 will shift this responsibility to hiring businesses.
The Government has proposed the changes to contracting tax rules in the private sector to combat what it calls “disguised employment”, where contractors do essentially the same work as employees but play less tax and reduced national insurance contributions.
Currently freelance contractors, one-man-band limited companies who work on projects for companies, pay corporation tax at 20 per cent instead of higher PAYE rates, while employers duck national insurance contributions. The Treasury sees both freelancers and employers as