IR35 - also known as “off-payroll working rules” has been both a much-needed bit of legislation to tackle people not paying enough tax, and a massive headache for businesses. It has been marred in controversy since being rolled out to the private sector in April of this year due to mixed messages and confusion on how to properly comply
Basically, since the reforms were introduced, instead of the individual letting HMRC know if they’re an employee or contractor, and therefore treated differently when paying tax, the onus is now on the client engaging them to let HMRC know.
So this is now proving to be a headache as off-payroll workers are not entitled to receive or have deducted from their pay things like statutory payments such as SSP, SMP etc, National Minimum/Living Wage rate, holiday pay, student loans and automatic enrolment pension scheme contributions. So where the hell do you even start? How do you know who should be off-payroll or not?
First of all, you can quickly and easily check employment status for tax here. Once you have identified a worker who is inside IR35 you set them up on BrightPay Payroll Software and tick “off-payroll worker” which will disable entitlements that do not apply to contractors who fall inside the off-payroll working rules. Then, once the employee has been set up, BrightPay will automatically disable some settings such as student loans and annual leave entitlements.
Further to this, if a user tries to add statutory leave, BrightPay will automatically flag this to you and the statutory payment will not be processed. For automatic enrolment, an alert will appear for off-payroll workers for you to mark them as being exempt, which then disables any auto-enrolment features that may appear. Then, when making a full payment submission, it will automatically include details of workers who fall inside IR35, ready to send to HMRC.
If you are the contractor who is working for a large/medium-size company or public sector and are deemed to be inside IR35 then BrightPay has your back here too. Salaries paid to you via your own limited company can be paid without deductions of PAYE and NIC. This is because taxes have already been suffered on the payments from your client.
Now doesn’t that sound like a dream? Get someone to do all the hard work for you - sounds like my cup of tea. By using BrightPay you’ll save yourself a lot of time and energy, but more importantly, remain compliant in a time when HMRC are cracking down hard. One less stress to worry about in these very stressful times! For a full demo on all these amazing features head over to BrightPay and see what all the fuss is about!
Written by Aoibheann Byrne