How will new IR35 rules affect your marketing freelancers?

Everything to do with marketing is continually changing and evolving; adapting to new processes is par for the course. But what happens when that change has an impact on your bottom line?

IR35 is one change that could impact how freelancers and contractors engage and work with organisations – and vice versa. The marketing sector is no stranger to freelancers, so how will the new rules affect the marketing freelancers your business works with?

What do the new rules mean?

In a nutshell, the IR35 update will put the onus of classifying a contractor’s tax status onto the company rather than the individual. This aims to identify which workers genuinely operate as freelancers and which are effectively disguised employees.

“These changes are a real paradigm shift for many contractors,” explains Ian Haysom, contracts manager at Stopgap.

“HMRC are attempting to create a level playing field in the contractor arena. The good news is HMRC have confirmed they will take a ‘soft approach’ in the first year to non-compliance and the new rules will only apply to those services performed after 6^th April 2020.”

The changes have already been rolled out in the public sector, where the results have been mixed. There have been reports of hiring managers losing skilled contractors, and blanket-assessments (where all workers are either deemed inside or outside IR35) have caused some people to move away from freelancing altogether.

How will the new IR35 rules impact marketing?

The potential for significant change is high.

Already, some areas within marketing have seen a shift in demand from contracting roles to internal positions. However, with freelancing positions seeing such high demand in marketing in recent years, it seems hard to imagine that is going to suddenly stop.

Freelance marketers aren’t just drawn to higher compensation (although that is clearly a factor), they are also choosing this route because it offers greater flexibility. Tax implications aside, a more rounded work-life balance is hard to beat.

It’s worth mentioning that changes to IR35 legislation will only apply to medium and large business – companies with 50 employees or less and a turnover of £10.2 million or less will not be affected.

As Ian explains: “Candidates who are working for a medium to large company through Stopgap will be processed as PAYE so they can have comfort in the knowledge that they are meeting all the requirements regarding contributions during their placements.”

How to look after your marketing freelancers

If your business is not classed as small, then there are a few things you can do to make sure you are prepared for when the new rules come into effect on 6th April this year.

Let’s start with some good news. The government has pledged to take a ‘light touch approach to penalties’ in the first year of the reform. So businesses who accidentally breach the IR35 rule changes will enjoy a grace period.

However, that doesn’t mean you can sit back and hope for the best. You need to adopt a case-by-case approach to determining the status of individual freelancers. Make each decision independently and fairly. And avoid blanket assessments which are unfair and could lead to legal action.

Find out how Stopgap is managing the changes to IR35 legislation in our blog post: Changes to the IR35 legislation for Ltd company contractors. Or speak with one of our consultants for more detailed advice about how the changes will affect you or your business.