Best Startup
Justin Small, founder and CEO of Future Strategy Club, on the new tax rule change and how this will impact freelancers.
After being delayed last year due to COVID-19, the new IR35 tax rule change has now come into force. Today, worry is widespread surrounding the complexity of this easily misunderstood new taxation rule, as tax liability shifts from all freelancers control. In particular, many freelancers are concerned that they will be wrongly assessed by organisations and left at an even further financial loss, after bearing the financial brunt of the pandemic.
Under the new taxation, all medium to large-sized businesses will be responsible for assessing the tax status of every freelance contractor they hire, deciding whether they will be classified as self-employed (outside the IR35) or employed (inside the IR35) for their service; a judgment which previously fell upon the freelancer themself. If classified inside the IR35, freelance contractors will be on a company’s payroll, meaning they will have to pay the same PAYE and national insurance contributions as full-time employees. Ultimately, the new legislation aims to clamp down on contractors working as ‘disguised employees’ and therefore, paying too little tax.
Changes to the IR35 self-employed taxation have come with controversy and concern for freelance contractors, with many still struggling from pandemics detrimental knock-on effect. There has also been widespread confusion among both freelancers themselves and the firms they work for as to what the legislation actually means and how it will affect them day-to-day.
This makes the rise of co-agencies like Future Strategy Club vital right now, as the future of freelancing begins to look ambiguous for many. Justin Small, founder and CEO of Future Strategy Club, recognises that many freelancers are still struggling from the pandemic’s detrimental knock-on effect. And the recent news of the new IR35 tax rule change makes this struggle ever more prominent for many.
