IR35 in the Public Sector

New rules mean that the responsibility for deciding the correct IR35 status from 6 April 2017, will lie with public sector bodies, rather than individual companies. Accordingly, the liability to account for the correct taxes will transfer from the individuals company to the public sector body.

If the public sector body decide that IR35 legislation does apply, they will deduct tax and national insurance from fees and pay net amounts to the company, as they would do for employees. It will also mean that public sector bodies will need to pay any employers national insurance that is due at 13.8%.

HMRC have provided guidance to check if the engagement falls within these rules here.

You can read more on the new rules here.