Status determination statement SDS
Contents |
[edit] Introduction
From 6 April 2021, larger businesses face new duties under HMRC’s ‘off-payroll rules’ when they use individuals who work through their own limited company. In practice, this means that for those companies that have workers in their business who are there regularly, but not on the PAYE system because they are paid via other routes, it is vital to find out more and act accordingly. This is where the Status Determination Statement (SDS) comes into play.
[edit] What is SDS?
As a component of the Finance Bill 2020 (which amended IR35), the SDS became a requirement for the end user. When compiled correctly, an SDS documents the end user’s processes - and reasons - for deciding the employment status of contractors, whether that status is inside or outside IR35.
For the Status Determination Statement (SDS) to be valid, the end user must:
- State whether or not the worker would be an employee for tax and NIC purposes if they were directly engaged by the client.
- Provide their reasons for coming to that conclusion.
- Have taken reasonable care in coming to their conclusion.
[edit] Key details
Due to the significance of this term 'reasonable care', the Government has created an Employment Status Manual that can help end users understand the nuances of the phrase. HMRC’s Check Employment Status for Tax (CEST) tool can also be used to aid those making employment status decisions. A CEST test can be done anonymously, but if it shows that a worker is self-employed, it can be useful to log it with that person’s name and print a copy as evidence that the test was completed.
Status determinations that were made before 6 April 2021 can be valid SDS for projects that continue after 6 April 2021 as long as they meet the legislative requirements. An SDS must include the reason for reaching the conclusion and have been passed to the worker and any third party the client contracts with.
The SDS information should be reviewed every six months, since supply chain and subcontractors change frequently.
[edit] Related articles on Designing Buildings Wiki
- Construction Industry Scheme or IR35?
- Employee.
- IR35.
- IR35: essential steps for compliance.
- PAYE.
- Personal service company.
- Sub-contractor.
[edit] External resources
- Gov.uk, Check Employment Status for Tax.
- Gov.uk, Employment Status Manual.
Featured articles and news
Report on the construction sector in Ireland
TASC/CIOB study looks at post-pandemic struggles and trends.
Revised targets for Carbon Budget 6
The Government announces recalibrated goals.
ECA proposes strategies for the present and the future.
Paul Morrell to lead independent review of the construction products testing regime.
Standard will help employers foster wellbeing and manage psychosocial risks.
The United Nations has approved the IFSS common principles
Global fire standards for safety of people and property.
An introduction to the 5 core principles of lean.
Civil engineers and environmental methods of construction
Can the profession use its skills to save the world from climate change?
How faulty science resulted in sanitation reform.
Conserving the Hilda Besse Building
Improving facilities, accessibility and overall appearance.
BSRIA IAQ topic guide published
Free download of TG 12/2021 available.
Electrotechincal mentors wanted
TESP works with The Youth Group to form skill sharing network.
OpenBuilt supply chain technology in development
Big tech collaborates on platform for the built environment.
Concerns raised over Future Buildings Standard
Letter signed by 21 organisations sent to MHCLG.
Receive the Designing Buildings newsletter
Click the button to subscribe.