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Taxing matters New tax laws will hit the UK fitness sector in early April, changing the way freelance PTs are legally classified for income tax and national insurance, as Abi Harris reports


R35 - four simple characters with a big impact for operators in the health and fitness industry. As the Chancellor left all mention of this impending tax change out of his March budget, this means private sector IR35 tax reforms officially hit our sector in April.

What is IR35? IR35 is new tax legislation that means private sector employers will be responsible for assessing whether or not contractors need to pay income tax and national insurance contributions. It will also compel operators to seek out ‘disguised employees’, or contractors with a permanent position at a company, who don’t pay the same income tax or national insurance contributions (NIC) as standard employees. The purpose of IR35 is to collect the same amount of tax and National Insurance Contributions as would have been paid if an individual was employed directly. It’s widely believed that IR35 changes could be disastrous for the self-employed, who are likely to be hit with additional costs, while companies


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– already grappling with the ongoing fallout from COVID-19 – will need to assess the likely impact of the new legislation on their businesses and move to accommodate the change.

What it means for our sector IR35 will apply where personal trainers or instructors provide services to an organisation through an intermediary company, such as Joe Bloggs PT Services Ltd, or are supplied via an employment agency/business. The question to ask is ”if it wasn’t for that company in the middle, would the individual be regarded as an employee/worker for tax and NIC purposes?” Health club and leisure centre operators engaging ‘off-payroll’ PTs and instructors via an intermediary will be responsible for determining their employment status and paying Income Tax and NICs for those deemed employees. Aaron McCulloch is MD of Your Personal Training (YPT), which supports PTs and gym operators to deliver personal training services. He says: “Many PTs work in clubs as ‘offpayroll’ gym or class instructors via their own

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