Key factors to consider when you’re hiring contractors from the UK

In September 2022, the new UK government leadership announced plans to repeal their IR35 rules, throwing compliant freelancer engagements once again into a state of flux and uncertainty.

These rules were initially brought in as part of the UK’s “anti-avoidance” tax legislations to ensure that independent contractors were paying roughly the same amount of UK Income Tax and National Insurance contributions as their employee counterparts.

In October 2022, it was then announced that the repeal of the IR35 laws had been scrapped. 

This is a timely reminder if you’re working with global freelancers that the rules and laws governing your independent contractors can change overnight.

Hiring overseas freelancers from the UK means that as well as doing your initial research about the tax and legal requirements in this country, you also need to be constantly vigilant about any potential or approved changes to the legislation.

If you overlook these regulation changes, your business can quickly go from being compliant, to risking expensive fines and penalties related to your contractors.

Using a platform like Worksuite makes things easier for your business when it comes to staying compliant, and it gives you peace of mind when you’re hiring freelance contractors based in the UK.

In respect of the IR35 rules we mentioned above, you also need to know about the “inside” and “outside” regulations that exist within this wider legislation.

“Inside IR35” means that taxes for a freelancer engagement must be paid as they are earned (also known as PAYE). 

“Outside IR35” means freelancers hold the responsibility to pay their taxes on income from the engagement. 

If you’re hiring freelancers in the UK, whether you’re a public or private company, you’re required to assess each UK freelancer engagement and issue a Status of Determination Statement (SDS) that will dictate how your freelancer’s taxes are to be reported and paid.