IR35 Changes coming into force 6th April 2020

If you intend to borrow from your company, can you avoid the tax charge?

HMRC will refer to you as the worker if you are the person actually doing the job, your company or partnership that bills for the work you do is an intermediary and the business etc that you are working for is the client. From the 6th April, the client must decide if the new regime applies to them.

If it does they must review the terms and conditions on which you provide your services and decide whether if you worked direct rather than through your company you would be an employee instead of a freelance contractor

If the client decides you would be an employee, it will need to deduct tax and national insurance for all future payments it makes to your company. It must inform you of this decision, but it doesn’t have to until it pays you, this may mean the first you know if this is when you are paid less than you billed the client

Tip

Ask your client to review the contract well before that date, HMRC has a check employment status for tax (CEST) online tool. Beware however this is being overhauled as the current version can produce the wrong answer. You can challenge your client’s assessment and it has 45 days to explain how it arrived at its decision

Changes to property relief on capital gains income from April 2020

Currently proposed, not yet bottomed out but likely to come into force from April 2020.

Reduced relief on the final exemption period of deemed occupancy from 18 months to 9 months along with changes to the letting’s relief.

New shared occupation conditions will need to be met to qualify. Currently can claim the lower of your private residence relief, gain in the letting period or £40k but you will now only get this this lettings relief if you are in occupation and sharing the occupancy of your residence, so in layman’s terms you need to still be living there. This means that going forward it will be very hard for people to get this relief and for most people it will be £0. So on a property sale there will be cliff edge effect if you sell your property after April 2020 compared if you sell if you sell in the current tax year, see table below: