It is estimated that in the UK, around 1 in 3 construction industry professionals are self-employed.

This means that the controversial IR35 rule changes, which came into effect from April 6, will be felt throughout the sector for both employers and contract workers.

What is IR35?

The IR35 legislation was originally introduced in 2000 as a means of tackling tax avoidance by limited companies.
It was designed to assess whether a contractor was a genuine contractor, or if they were effectively working as an employee - maintaining the traditional employee/employer relationship - while working under a ltd company for tax break purposes.

What is the new IR35 rule?

The IR35 rule shifts the responsibility for determining tax status away from contractors trading through their own companies and onto the businesses engaging the contractor.

Construction business will therefore have more considerations when engaging contractors to avoid fines through wrong IR35 assessments.

The decision as to whether a contractor is in or outside of IR35 will become the job of the business that engages the contractor.

Inside IR35 = Points towards employment and you will have to pay Tax and National Insurance accordingly in the same way traditional employees do.
Outside IR35 = Points towards self- employment.
The changes to the legislation will apply to medium and large companies in the private sector. They will not currently apply to small companies.

The changes were first due to come into force in April 2020 but were pushed-back due to the coronavirus outbreak.

How will this affect me?

If you are a freelance or contract worker within the construction industry and you are concerned about how these changes could affect you, get in touch with our team who are on hand to offer help and support (0121 740 0745).