Revenue have recently updated its guidance on employment status and how the rules should be applied in practice, following a Supreme Court decision in the Domino’s Pizza delivery drivers (Karshan) case.
As a result, some individuals previously engaged as self-employed contractors are now being told they must either move onto PAYE, or operate through a limited company instead.
It can feel like a sudden shift, particularly where working patterns haven’t changed.
What it means for you
For businesses, reclassification can bring payroll obligations and employer taxes.
For individuals, the impact can be just as significant.
Where someone is moved onto PAYE, the scope for claiming expenses is much more restricted than under a contracting structure. Working across multiple employments can also result in excess tax being deducted at source, creating short-term cashflow pressure.
Impact on Arts Sector
This shift has been particularly evident in the TV, film and theatre sector, where long-standing sole trader freelancers are being asked to review how they provide their services as production companies manage employment status risk.
Some are now being asked to operate through a limited company. While that structure won’t suit everyone, it can offer greater flexibility in managing income and expenses. If you’re considering this route, our guide on setting up a limited company outlines what’s involved and when it makes sense.
Getting clarity early
Whether you’re the one being paid or the one doing the paying, if these changes are affecting your day-to-day work, feel free to get in touch with Splash Accounting - we’re happy to talk it through.