Reforms to existing IR35 legislation have shifted the responsibility of determining the tax status of contractors operating via a personal services company (PSC) from the contractor to the client. The reforms were first introduced in the public sector in 2017, followed by medium and large-sized organisations in the private sector in April 2021. 

If you’re a PSC contractor working in a tech role, what does this mean for you and how can you continue to secure the best opportunities? 

Let us help you secure the best roles 

That’s where we can help. We work with thousands of contractors every year to find them the best opportunities with our broad range of clients who are searching for vital tech contractors like you. To ensure we line up the best engagements, we’ve been working closely with organisations to help them understand and navigate IR35 reforms since their inception in 2017. 

We’re also able to offer you a discounted rate for status determination reviews thanks to our relationships with leading tax advisors.
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IR35 what you need to know

What is IR35 legislation and how does it affect me?

If you’re a tech contractor operating as a PSC then you could be impacted by the reformed legislation.
 
IR35 legislation, first introduced in 2000, focuses on the tax compliance of those individuals operating ‘off-payroll’ from their client – typically supplying their services via a personal services company (PSC). The legislation was reformed in 2017 in the public sector, and later in the private sector in April 2021, meaning it’s no longer up to the PSC to determine whether the relationship between them and their client is that of an employee/employer and therefore which employment taxes are due. This responsibility now lies with the client.

What’s the difference between being inside or outside of IR35?

When you take on a new role, if the client deems your assignment to be ‘outside’ or ‘out-of-scope’ of IR35, this is the same as self-employment and the gross payment goes to the PSC. Conversely, an assignment that is ‘inside’ or ‘in-scope’ of IR35 means there’s an employer/employee relationship present so the client will need to pay PAYE as well as other employment taxes.

Are all contractors affected by the IR35 reforms?

Not all contractors are affected by the updates to IR35 legislation – only those contractors who operate via a personal service company (PSC) will be affected, and even then only if you’re taking on an assignment with a public sector organisation or a medium or large sized organisation in the private sector.
 
Organisations across the public and private sectors remain reliant on tech contractors with the specialist skills they need to get their tech projects over the line, so there’s no shortage of opportunities available to you whether you are affected by the legislation or not.

How often will I need to undertake a tax status determination according to the IR35 reforms?

You’ll need a new determination each time you change role as a minimum. But if you’re working on the same contract for an extended period of time, you may want to undertake a new determination to ensure your working practices haven’t changed and that your tax status is still correct.

How can Hays help me understand IR35 and continue to find the right roles?

Working with us means you’re in safe and very experienced hands. We’ve got lots of experience helping both organisations and tech contractors understand the updated legislation, and we’ll work closely with you to make sure you know what the reforms mean for you, what your options are and how not to let the reforms stand in the way of your job search.
 
We’re in touch with a lot of different employers across the private and public sectors, so we have an incredibly wide range of different roles available for you to choose from. By choosing to work with us you can also benefit from discounted rates for status determination reviews thanks to our relationships with some of the leading tax advisors in the field of IR35.