The off-payroll working rules that currently apply where services are provided to a public sector body through an intermediary, such as a personal service company, were due to be extended to the private sector from April 2020.

However, the start date was put on hold as a result of the Covid-19 pandemic, and the rules will now apply from 6 April 2021 to medium and large private sector companies that engage workers who provide their services through an intermediary, such as a personal service company.

The rules require the engager to determine whether the worker would be an employee if they provided their services directly, rather than through their personal service company, and provide the worker with a copy of that determination, together with the reasons for reaching it. If the determination shows that the worker would be an employee if their services were provided directly, the fee payer (which may be the end client or a third party, such as an agency) must deduct tax and National Insurance from payments made to the worker’s intermediary, and report those payments to HMRC under RTI.

The IR35 rules continue to apply to workers who provide their services through a personal service company to a small private sector end client. The personal service company remains responsible for deciding whether IR35 applies, and working out the deemed payment if it does.

Speak to us to find out what the new off-payroll working rules mean for you.