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Posted by Adrian Trace on 20 Apr 2020

Changes To Off Payroll Working Rules Suspended

The introduction of changes to the UK off-payroll working rules for the private sector, which was set to take place on 6 April 2020, have been suspended for a year due to COVID-19, and will now be introduced from 6 April 2021.

These changes do not affect the basis of the off payroll working rules (“IR35”) – it is still the case that where a worker provided to a client by an intermediary would be an employee of that client if they were engaged directly, PAYE will need to be operated on payments made by the client in respect of that worker’s services.

Until the changes are introduced, the decision whether the IR35 rules apply is made by the last intermediary, often a personal service company owned by the worker; this intermediary is also responsible for operating PAYE on any worker payments.

From the introduction of the changes, it is the end client who will be responsible for determining whether IR35 applies to the engagement of the worker. The responsibility for operating PAYE also shifts to the last intermediary that is unconnected to the worker. Thus, the risk from incorrect IR35 will be shifted from the worker and their intermediary to the client and their intermediary.

This is a huge change that has already had a significant impact on the public sector, where these rules have applied since 6 April 2017. An additional year for the private sector to prepare for these changes is welcomed.

If you would like any advice regarding the changes to off payroll working rules or would simply like to discuss other ways in which we could help you or your business, please contact us on 01962 856 990 or customerservice@taxinnovations.com

 

See also…

IR35 Changes Loom for the Private Sector

Changes to IR35 for office-holders

IR35 Personal Service Companies

IR35 Tax System ‘completely unnecessary’

UK Tax Residence – Impact Of Coronavirus

COVID-19 Summary of Available Assistance