New Law In April - IR35 - Will Affect The Way Freelancers Are Paid, Are You Ready?

NEW LAW FOR FREELANCERS - With only seven months until IR35, many self-employed people need to start thinking about how the new tax laws might affect their earnings. In April 2020, the law aims to stop 'disguised employment' and means that those freelancers who have structured their business as a personal service company or Limited company will change the way they pay their tax.

The new rules will force private sector companies to be responsible for deciding if a freelancer or contractor's employment status is correct - rather than the individual deciding it themselves. When this law, which has was reformed in 2017, comes into force, the clients of these freelancers will make the decision about whether the freelancer will be taxed at source or paid gross.

IR35 could reduce a freelance worker's net income by 25%, but many recruiters do not realise how it will affect their business. YunoJuno found that 43%  of senior personnel didn't know how IR35 would affect their business and 42% were unaware of the fines for non-compliance.

Nick Woodward, CEO of ETZ Payments, provides the following commentary:

"When hiring freelancers many employers are unaware of the details that go into paying them. Invoices often come in a variety of forms and gig economy employees are often paid inconsistently and late. With modern technology, businesses should be able to keep on top of their freelance employee's payments so they can be paid on time and without error. If businesses want to retain and attract the best talent, they should educate themselves around IR35 and ensure that they have robust and efficient timesheet technology."

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