Foreign language tutors are among those to have been caught in the web of IR35’s extension to the private sector from 6 April 2021.

Typically, these are people who provide one-to-one or group tuition to help English speakers towards gaining a qualification in a foreign language.

They trade under the usual business structures, mainly as a sole trader or a limited company – or a personal service company (PSC) to be precise.

Such is the niche skill of their vocation, language schools or tuition agencies often engage foreign language tutors as freelancers.

However, these larger or medium-sized private-sector organisations have taken on new responsibilities since the start of 2021/22.

These rules brought them in line with self-employed or freelance foreign language tutors, or those operating through a PSC in the public sector.

Before 6 April 2021

Previously, some tutors were required to prove to HMRC they were genuinely self-employed or operating as a freelancer.

If they couldn’t, both the tutor and the engaging organisation were at risk of increased tax and National Insurance contributions (NICs) liabilities.

It was the tutor’s responsibility to ensure they met HMRC’s criteria for self-employment by using its Check Employment Status for Tax (CEST) test.

After 6 April 2021

Now, organisations that engage tutors through PSCs or other intermediaries, such as partnerships or limited liability partnerships, need to assess whether the rules apply to contracts they enter into.

Where the IR35 rules do apply, the organisation paying the tutor’s PSC or any other intermediary needs to deduct income tax and NICs at source before making the payment, and pay employers’ NICs.

For tutors who are deemed to be ‘inside the IR35 rules’, a number of organisations are asking tutors to become employees while others insist tutors move on to PAYE via a recruitment agency or an umbrella company.

Many recruitment firms don’t operate PAYE and some tutors have closed down their PSC in preference of taking on temporary contracts through umbrella companies.

Get expert help

If you teach a foreign language and are still unsure about how the IR35 rules apply to you, call me on 07803 782100 or email me on jon@red76tax.com and I’ll be happy to help.

I can run you through the intricacies of the rules, including the CEST tool, mutuality of obligation, substitutions and penalties. HMRC is running a light-touch approach towards the latter, but this expires on 5 April 2022.

You have time to get your head around the rules, understand your options, and what you might need to request the engaging organisation to ensure compliance. Don’t delay, get in touch with me today.