From 6 April 2021 some, but not all, private companies will see changes to how the tax rules work when engaging self-employed consultants or contractors. The rules apply where the contractors are hired through their own personal services company (intermediary). The responsibility for deducting income tax and national insurance will shift to the hiring company, not the intermediary. This means that, if it is later found that the person should have been classed as an employee, it will be the company and not the intermediary which is liable to pay the income tax and NI. This is the opposite of the position before 6 April 2021 where the intermediary is responsible.
Private companies which are affected will have to make a reasonable determination whether a worker is an employee or self-employed. The government has a useful checker here.
However, not all companies are affected. It only applies to private companies that meet two of these tests:
- you have an annual turnover of more than £10.2 million
- you have a balance sheet total of more than £5.1 million
- you have more than 50 employees
If that is not you, you can rest easy but you do need to know this to tell any agencies that you use to find workers.
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