IR35

What is IR35?

The off-payroll working rules (IR35) can apply if a worker (sometimes known as a contractor) provides their services through their own limited company or another type of intermediary to the client. An intermediary will usually be the worker’s own personal service company. 

The rules make sure that workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same Income Tax and National Insurance contributions as employees. These rules are sometimes known as ‘IR35’.

April 2021 Changes to Off-Payroll Working

From 6 April 2021 medium and large private sector clients will need to apply the off-payroll working rules. The rules already apply to public sector clients. 

If a contractor provides services to a small private sector client, the worker’s intermediary (GP Limited Company) will be responsible for deciding if the rules apply.

Lantum is not the employer, the relationship is between the locum and the practice. It is therefore the responsibility of either the locum or the practice (depending on the type of client) to determine if a session is in or out of scope of IR35. 

If you are unsure, be sure to check with the HMRC tool 

If a session is deemed to be in scope of IR35, the practice must indicate this on the session as it is posted. Lantum will process the payment of the IR35 session to the locum, once payment has been received from the practice. IR35 sessions are therefore exempt from Rocketpay. 

As the fee payer, Lantum will be responsible for:

• calculating the deemed direct payment to account for employment taxes and National Insurance contributions associated with the contract
• deducting those taxes and employee National Insurance contributions from the payment to a worker’s intermediary
• paying employer National Insurance contributions
• reporting to HMRC through Real Time Information the Income Tax and National Insurance contributions deducted

More information on the changes to IR35 legislation can be found below. 

GOV.UK

April 2021 changes to off-payroll working for clients

Understand and prepare for changes to the off-payroll working rules (IR35) if you are a client receiving services from a worker through their intermediary.

GOV.UK

April 2021 changes to off-payroll working for intermediaries and contractors

Understand and prepare for changes to the off-payroll working rules (IR35) if you're a contractor or an intermediary and your worker provides services to a client.

GOV.UK

Prepare for changes to the off-payroll working rules (IR35) for clients

Find out how to prepare for changes to the off-payroll working rules if you engage contractors working through their own limited company.