Off-payroll working rules extended
The extended off-payroll working rules finally come into effect from 6 April 2021. From that date, the rules currently applying where the end client is a public sector body also apply where the end client is a medium or large private sector organisation.
If you provide your services through an intermediary such as a personal service company, or you engage staff providing their services in this way, it is important that you understand how the rules affect you. Speak to your professional adviser to find out what the changes mean for you.
Workers and contractors
If you provide your services to an end client through a limited company or other intermediary, from 6 April 2021, if the end client is a private sector organisation, you will need to know whether it is a medium or large private sector organisation or a small organisation.
If the end client is a small organisation, your intermediary must continue to assess whether the engagement falls within the IR35 rules and, if it does, operate those rules (calculating the deemed payment and accounting for tax and National Insurance).
If the end client is a medium or large private sector organisation, you no longer need to consider IR35. The end client must determine whether the off-payroll working rules apply, and deduct tax and National Insurance from payments made to you if they do.
Medium and large private sector organisations
If you are a medium or large private sector organisation that engages workers who provide their services through an intermediary, such as a personal service company, from 6 April 2021, for each engagement you must assess the status of the worker, and give the worker a copy of the determination reached. If, ignoring the intermediary, the worker would be an employee, the off-payroll working rules apply.
Where this is the case, you (or the fee payer if different) must deduct tax and National Insurance from payments made to the worker’s intermediary and account for the tax and National Insurance deducted, together with the associated employer’s National Insurance, to HMRC under Real Time Information.
Small private sector organisations
If you are a small private sector organisation, you do not need to apply the off-payroll working rules. Where workers are engaged via an intermediary, such as a personal service company, you can continue to pay the worker’s intermediary gross.