Finance Bill will affect some self-employed

The Finance Bill has been subject to much speculation since it was announced in Autumn 2013. As part of the legislation contained within the bill, the ‘False’ Self-Employment (Onshore Employment Intermediaries) legislation will come into effect on 6th April 2014. It will affect self-employed people who are employed via intermediaries such as employment agencies, payroll or umbrella companies (any business that supplies labour) who currently only pay taxes as a self-employed person.

We look at who this legilsation will affect, and will not affect, in our article here.

The Government have introduced the Finance Bill legislation to clamp down on the use of ‘false’ self-employment models where workers and employers avoid tax and where the employer also avoids their other employment responsibilities.

From 6th April 2014, workers in this situation will have tax and employee National Insurance Contributions (NICs) deducted at the source from their pay by the ‘intermediary’. The intermediary will also have a new liability to pay employer NICs.

The Government estimate that the new Finance Bill legislation will affect around 250,000 people and will increase tax and NIC intake by around £520m next year – some commentators, however, doubt these figures!

In April 2015, concerns were expressed by Recruiters bodies that many affected businesses are unaware of the new Act and it’s reporting requirements; and that industries such as the events industry may not even be aware that the new rules apply to them as they may not be aware that they are classed as an ‘intermediary’. We look in more detail at how you work out if you are an employment intermediary business here – as the scope is very wide.

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