What does this new IR35 law mean for me as a freelancer?
The first thing to say is that this is not new law - it has actually been around since 2000. Contractors working through things like personal services companies (PSCs) have always been obliged to pay employee-like taxes (income tax and NICs) when they have been working in an employee-like way (HMRC call it ‘disguised employment’).
What’s happening in April 2020 is about changing the mechanics of who decides and how that tax gets paid: the client needs to determine if the Brief would involve you working in an employee-like way and if yes YunoJuno will need to deduct income tax and NICs at source from your invoice. If assessed by client as ‘outside’ IR35 nothing changes for you.
How does this affect me as a freelancer using the YunoJuno service?
There will be two ways it affects you. Firstly, you’ll notice that clients will be very aware of IR35 because they have to do an IR35 assessment for each Brief they place (and you’ll get to see the results of that). So there may be a couple more steps in the process than we have today – but we’re working hard to make things really smooth. Secondly, if a Brief you take is assessed by the client as ‘inside’ IR35 you’ll see some deductions in the amount you get paid for income tax and NICs.
Will YunoJuno inform the freelancer of which briefs are in and out of IR35?
Yes. When you see the Brief it will be really clearly labelled if the client has assessed that particular Brief as ‘inside’ or ‘outside’ of IR35.
Will there be any specific changes on YunoJuno regarding IR35?
We’re SO on it. YunoJuno will be making the changes, so for each brief it’s really clearly labelled as ‘inside’ or ‘outside’ IR35 and why. It will still be your responsibility to set and agree your day rate with the client, but for Briefs which are ‘inside’ IR35 we’ll have all the nuts and bolts in place to deduct income tax and NICs at source.
Because the contract I get is from YunoJuno rather than the End Client. Does this mean your contracts are already IR35 friendly?
When you see the Brief it will be clearly labelled if that particular Brief is ‘inside’ or ‘outside’ IR35 – so you’ll know which ones to choose to be “IR35 friendly” for you. But remember, each Brief will be assessed individually by the clients – and a large part of it comes down to the ways of working: when, where and how the client would like you to work. YunoJuno supports all types of freelancer and all types of contract, so that you have the freedom to choose. Perfect.
Does it mean we'll be invoicing less because of the national insurance?
You will still invoice exactly the same amount (the fee you agree with the client plus VAT if applicable). If the Brief is ‘outside’ IR35 nothing changes, and you’ll be paid the fee plus VAT if applicable. If the client has assessed the Brief as ‘inside’ IR35 then you’ll be paid subject to YunoJuno making deductions for income tax and NICs from your fee. It won’t be quite the same as being an employee on PAYE, but the calculation will be similar - and of course it will depend on how much you earn and your tax code.
Being a freelancer working for companies around London, on a 3, 6 or 12 months basis...am I in or out?
The thing about IR35 is that you have to take a number of things into consideration to decide if a contract is ‘inside’ or ‘outside’ of IR35. It’s a little bit about the terms, but a lot about the ways of working: when, where and how the client would like you to work. If you’d like to get a sense of all the different things taken into account today for the public sector, go ahead and have a play on the HMRC website with the CEST tool. It won’t be exactly the same for the private sector, but it will be similar.
Does the Client take on all the liability now that the onus to classify the role is on them?
From April 2020 there’s two sorts of liability: the client has the ‘liability’ to make the assessment (i.e. the person using the freelancer has to determine if they are doing employee-like work) and the ‘fee payer’ has the liability to deduct the tax at source and pay over to HMRC (i.e. YunoJuno as the person who pays the freelancer’s PSC). That’s the basic position but (there’s always a BUT) liability can still move around if people don’t follow the rules just to try and avoid being ‘inside’ IR35.
Can I work inside and outside at the same time?
Yes you can, you are able to have multiple contracts with varying classifications, or you could do a contract one week that’s inside, but the next week you could be doing a different contract that’s outside. For each individual contract it’s really important to remember that it all boils down to this: for this contract, for this client, with these ways of working, am I doing employee-like work or not?