IR35 Update for 2021 - How To Navigate Through It

If you are a PSC Limited Company contractor providing your professional services to a client or a business owner that engages with freelancers and contractors and need some guidance in navigating the upcoming April 21 IR35 rules, this video is for you. We'll be covering the basic changes coming on the 6th April 2021 as well as giving you some guidance of how to operate inside IR35 and a few ways to potentially avoid operating inside IR35.

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⏱️ Time Stamps:
1:00 - A recap on the new IR35 rules
2:11 - Obtaining a Status Determination Statement (SDS)
3:10 - How should you operate inside IR35?
4:09 - What's the average difference in taxation?
5:04 - What can you do with your limited company inside IR35?
6:44 - How can you stay outside of IR35?
8:07 - Schemes offering 80-90% take home pay?

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The new IR35 rules coming into force on the 6th April 2021 are:

From this date, it is your end client or engaging entity, like an intermediary or agency fee payer that has to determine the IR35 status of a contract with you, the contractor.
In order to determine the IR35 status of a contract, a status determination statement is now required.
The new rules apply to the private and public sector, for all end clients that are not classified as small or who are based wholly overseas with no UK presence.

If your contract assignment has been determined inside IR35, then you may have a choice as to how you wish to operate for this particular assignment as follows:

1) Use your existing PSC Limited Company
2) Use an FCSA approved umbrella company. We’ve included a link in the description box below for approved members.
3) Use your agency or intermediaries own payroll solution.

There are also other options you have been presented with.

Always remember, IR35 is assessed and determined on a contract by contract basis. Just because one contract or assignment falls inside IR35, it does not necessarily mean all your future contracts will too. However, if a particular assignment ha been determined inside IR35 then you may be thinking about what to do with your PSC Limited Company?

Here are some of our thoughts for your consideration.

🔴 Close it down through a voluntary strike off or a formal liquidation such as a members voluntary liquidation. Which route is dependent upon your company and your personal circumstances, and whether you have in excess of £25,000 of funds. Click on the link in the description box below for more information on this.

🔴 Keep it open for the foreseeable future. Generally speaking, you will probably want to consider keeping your PSC Ltd Co open if you expect to get some outside IR35 contracts in the future, get multiple contracts with a mixture of inside and outside IR35 or you want to repurpose your limited

🔴 Keep it open and place it in ‘dormant’ status. - We've done a video on this already: -    • Dormant Company Accounts UK - The Basics  

We hope this video has helped you to understand the new changes to IR35 and taken you one step closer to Knowing Your Numbers.

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Our videos are for general guidance, education and empowerment in helping you understand accounting, tax and your numbers. They in no way constitute specific advice to your specific circumstances. Me & my team would be delighted to help you with your specific queries or accounting requirements through a formal engagement.

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