HOW CHANGES TO IR35 MAY AFFECT YOU Posted at: October 6, 2017 Posted in: News Are you a contractor with your own company working in the public sector? Recent changes might make a big difference to your financial arrangements. If you work through a Personal Service Company (PSC) within the public sector, there are new rules that have been in force from 6th April 2017 which could have a significant impact on you. In this context, the public sector broadly means any government body – for example the NHS, a local council or the BBC. It is now the government body that must determine whether you, as a contractor, fall inside or outside IR35. If you are found to be inside IR35, the amount paid to your PSC is deemed to be employment income and the government body – or where relevant, the agency – is required to deduct PAYE when making payments. If you are found to be outside IR35, your PSC may still be paid gross, but there remains a risk of HMRC challenging the judgement and seeking to recover the tax from the government body itself. In addition, contractors working through PSCs in the public sector will no longer be entitled to the 5% tax-free allowance. In reality, these changes could see the end of PSCs in the public sector, with a significant burden placed on government bodies and little financial benefit to contractors. Make sure to speak to your accountant or professional adviser if you’re concerned about how this new regime in the public sector may impact upon you individually.