IR35 & Employment Status for on-air contributors

The Government, through HMRC, changed the IR35 tax rules. This affected the entire public sector from April 2017 – including the BBC. Changes were applied to the private sector from April 2021.

What is IR35?

IR35 or Intermediaries Legislation is a UK tax law.

It is about tax and National Insurance Contributions (NIC) for those providing services to a client/engager through a Personal Service Company (PSC) or other intermediary like limited liability partnership. This is also known as off-payroll working... i.e. not paid for via payroll.

If IR35 applies to an engagement, then the engagement fee must be treated as deemed "employment income" for tax purposes and income tax under PAYE and NIC must be deducted by the client/engager and paid to HMRC.

If IR35 doesn't apply, then the fee can be paid gross to the PSC

What has changed?

All public authorities and medium/large private companies must assess every engagement's "employment status" for tax purposes to ascertain if IR35 applies and ensure workers meet their tax and National Insurance obligations.

Previously where an engagement was via an intermediary, it was the intermediary's responsibility for this assessment. That changed. Under current legislation, the legal obligation to determine the employment status for tax transferred to the client/engage. Plus if the assessment is incorrect then the client/engager is responsible for any unpaid tax and NICs.

So where the employment status assessment determines that an engagement is one of "employed" for tax purposes then the engagement fee will be deemed "employment income" for tax purposes and the BBC will deduct tax under PAYE and employee's NIC.

Who does this affect?

IR35 applies to on-air contributors, like presenters as well as off-air freelancers like developers, who provide their services via an intermediary.

There are exceptions, for example:

• roles approved specifically by HMRC like actors and performers (covered by HMRC guidance note ESM4121)
• foreign entertainers (covered by Foreign Entertainers Unit rules) and
• contributors who are both tax resident overseas and providing their services wholly outside the UK.

Individuals (sole traders)

Individuals not providing services via an intermediary are not covered by IR35.

However, the BBC already has an existing duty to assess an individual’s employment status for tax on their engagement. 

Personal Service Companies 

PSCs and other intermediaries are no longer responsible for assessing employment status for tax..