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IR35 Rules and Changes from April 2021

Old IR35 Rules PRE 06/04/2017

The actual IR35 rules came into force in April 2000. The rule was the agency worker must decide if their status fell inside IR35 (where tax an NI has to be deducted at source) or outside IR35 where payments can be made without tax and NI deducted to a contractors Limited Company.

IR35 Rules April 2017

In April 2017 the rules changed. HMRC decided if a contractor works in the Public Sector (NHS) the public sector body (NHS) made the decision whether the contractor was inside IR35 or outside IR35 (the contractor could be paid through their Ltd company). In most cases all NHS Trusts decided that agency workers could not be paid via their limited company without the deduction of tax and NI being deducted at source.

The new rules from April 2021

From the 6th of April 2021 the IR35 rules that were introduced in April 2017 are now being extended to the Private Sector. This means any large or medium sized company where an agency worker is being paid through their limited company will no longer be able to make the decision whether they fall inside or outside IR35. From April 2021 the end client will make the decision.

The old rules are also being updated. The end client in private or public sector from April 2021 where a worker is paid via a limited company MUST issue a SDS (Status Determination Statement). The SDS must be issued to the agency worker with the clients status decision whether the worker falls inside IR35 (cannot be paid via LTD) or falls outside IR35 (the worker can be paid via LTD). The SDS must also be passed to the agency worker, the agency and any party in the contractual chain. This will include umbrella companies.

If the SDS is passed to the umbrella company with an inside IR35 SDS the umbrella company must deduct the tax and NI. If the umbrella company does not deduct the tax and NI after the SDS being passed to them then the umbrella company will be liable for the tax and NI that is not deducted.

Once the agency receives the SDS the agency has a responsibility to pass the SDS to the party paying the worker that being the umbrella company. The rule is “The SDS must be passed down the contractual chain to all parties involved in paying the worker”. Which ever party does not pass the SDS down the contractual chain where they should have, they will be responsible for the tax liability.

Most NHS Trusts will be making an Inside IR35 SDS for agency nursing staff. This will mean most agency workers will have to paid on a straight PAYE system or Umbrella and cannot be paid via their limited company. If an agency worker wants to disagree with an inside IR35 SDS they can dispute it with the end client (NHS Trust) and the Trust has 45 days to respond.

What is Nursing Personnel Doing?

Nursing Personnel are working with our clients to try and negotiate the best possible pay rates. If you are working via a PSC this will have an impact on your net take home pay. Please feel free to contact Nursing Personnel and we will offer you the best possible rate.

We are working with the REC and professional bodies to ensure agency workers concerns are highlighted.

These new rules will affect all agency contractors working the in private and public sector. If you are being paid via a PSC or personal services company we advise you speak to your accountant or professional advisor before the 6th of April 2021.

For candidates that have been working via their limited company Nursing Personnel are working with a number of compliant umbrellas to negotiate the best terms possible.

The Contact Telephone Number for Nursing Personnel