I are 35.

These are gonna be coming into effect for the private sector in April 2020 something that they've only done for the public sector back in 2017.

This will have an effect on many contractors and some freelances.

Those who are operating through what's called a personal service is company.

Are you a limited company?

What this video is all about is to explain the new rules, what it's all about and what contractors and freelances could be doing in order to mitigate the risks before Andi during the changes that will come into force so that off payroll working walls is only bought in for the public sector in April 2017.

So it's been around for a few years already in the public sector.

What's now happening is that the government and HMRC are rolling this out for the private sector, so that's the largest sector in the economy At the moment on, a lot of contractors and freelances operate in the private sector are now going to feel the impact of the off payroll working rules.

Now let me just explain the first most pertinent change off these rules in comparison to sort of the current ire 35 rules.

And that is that the onus of determining the ire 35 status per contract now lays with the client or the agency.

So again, the onus off determining the ire 35 status lies with the agency or with the end client.

That's a big, big change from what it used to be previously.

What used to happen under 35 rules is that the responsibility off determined in Eire 35 status per contract lay with the contractor or the personal service is company director shareholder on dhe.

By doing that, a lot of contractors and freelancers would quite simply get a i R 35 friendly contract written up, regardless of how they were operating substance of the legal forms right, and therefore the determination to be made outside of I 35 was pretty much straight forward.

In the majority of cases, most self determining contractors were going outside I 35.

I'm very, very few actually being challenged by HMRC Now, with the shift a bonus yen client now has that responsibility, and there are also consequences off.

Actually, not getting that determination correct.

Now the determination is gonna come down to some checklist is some tools that hmrc have provided in terms of you know how you can determine the state to survive 35.

And that's ultimately what the end client will be following in terms of those those rules in these that the guidance.

But if they do get it wrong on it, is challenged by hatred policy than the consequence of that.

Is that the liability for tax and national insurance?

The additional liability attracted national assurances.

A result then lays with the incline or the agency.

So there's quite a consequence.

Now Key thinks I know is that the new legislation only applies to medium and large organizations.

It doesn't apply to small organization.

So if you're a contractor freelance of working for a small organization than actually, you've got nothing to worry about in the sense that the current Fire 35 rules will be the status quo, that means the determination off the I 35 status still will sit with you.

The contract, a freelancer and your personal service is limited company.

But let's be realistic.

The majority of contractors and freelances of you out there are working for medium on dhe large size organizations.

And with that, the first rule of the first change, what we say is the pertinent one on the one that will impact you the most.

It's a part of the new process that's being provoked.

Proposed is that the n plein need to provide what's called on STS, so that's a status determination statement.

Now this needs to be provided in writing to the PSC Limited Company I yourself the contracts of freelancer in your limited company on the whole idea behind the STS is that the administration, now by 35 is firmly placed with the agency if there are three player or the end client, and it's up to them to make that status determination.

Another change is that the draft legislation is proposing to withdraw the 5% administration allowance.

So what does that actually mean, too previously under inside are 35 rules.

If you were inside are 35 you can actually came 5% administration allowance for administering the I 35 years is like an expensive outs there even now withdrawing that.

So let's say, for example, you were £100,000 basic math here.

Why percent of that would have allowed you £5000 off Setubal against income before taxes deducted.

So these are legitimate expenses that were allowed that's now being taken away in terms off the draft proposal.

Legislation and the government have also released on launched assessed, which is the contract employment status tall.

So this is a tool that's available out there to end clients, agencies and YOURSELVES contractors, freelancers running to your own limited company on The whole idea is that you can go on there and you conduce snapped.

What you can do an assessment of your are 35 status for a particular contract.

Now that tall exists.

At the moment you go on Google, you can find it.

There's been a lot of criticism about that fool that it's not robust.

It's not fit for purpose, A lot of sort of pushback from HMRC saying that, No, we built this tour.

It's robust on.

In my personal opinion, I think it's a total that needs a lot more work before actually work fit for purpose.

So let me just remind you that the current legislation that's been proposed Eastern in draw former as of today's date on today state.

We're in July 2019 as I'm speaking to you here.

So Eastern and draw former It hasn't been an active yet, but the aim is that it's gonna be enacted in the finance bill 2019 20 which will happen in the last quarter of the year around about October 20 19.

So there'll be announcement.

I'm gonna do another video on that once it is enacted to give you more sort of insight into the final legislation.

So for many of you contractors and freelances, I think the key thing now is to start thinking about what impact this could potentially have when you on.

The first thing I would recommend doing is start to sort of increase your knowledge about the new hire.

35 legislation.

Now it's not final legislation at the moment.

I do re emphasize it's in draft as we can't we stand as of today's date, and I'm speaking to you here now as of July 29 team.

However, in my personal view and for many kind of industry commentators out there.

There is a very, very high I'm talking 95% plus likelihood it will be enacted in Parliament, and it will become the final bill come the last quarter of 2019.

So it's best to start thinking about it now, having those conversations have a conversation with your accountant with your, um, accountant service provider, perhaps even your HR department.

If you are a contractor there, have a chat with them, see what they're doing, especially if you know a medium or large organization.

You know, Are they taking on people to sort of help administer this?

What are their plans?

What I'm gonna be doing is another video very shortly after this, which will start to sort of help contractors think about Okay, what kind of changes they can make to the behavior to the way they work to the substance of how they work in order for them to mitigate the risk.

Affording inside are 35 for a particular contractor on dhe.

The way that will be done is for contractors to start thinking like freelancers do freelances us such where they have more control about what they do.

More multiple clients on the right of substitution.

So moving away from the sort of one client, one organization, one contract we're working into another way.

Work in.

I've been saying that again.

I do re emphasize the key thing here is Don't let the tax telework commercial dog, because at the end of the day, you don't want to be putting yourself or talking yourself out of work just because you've got to pay more tax.

And in many cases, from what the experience was in the public sector, the lot of you contractors will probably go out there and negotiate a pay rise anyway.

Or a contract great rice.

And by doing that, it will help absorb with not mitigate, some of the higher taxes.

That's just the way the economics works, so there are very other various other things to consider in that respect.

So stay tuned.

I hope this little bite size video is being quite useful.

If you have any comments, please comment below, obviously like and subscribe.

Andi, please watch out for some more.