May 5, 2020

Government Urged to Rethink Off-Payroll Working Reforms

Off-payroll working in the private sector has been postponed until April 2021. So with the extra time now available, the Government are being urged to completely rethink the legislation.

Most of you will be aware that off-payroll working in the private sector has been postponed. And I’m sure many employers and contractors heaved a huge sigh of relief. The delay is in response to the ongoing spread of COVID-19. The legislation is now expected to take effect on 6 April 2021, rather than 6 April 2020.

House of Lords sub-committee: IR35 ‘riddled with problems’

Meanwhile, the House of Lords Economic Affairs Finance Bill Sub-Committee, which investigates technical issues of tax administration, clarification and simplification, published a report on 27 April 2020 entitled “Off-payroll working: treating people fairly”.

The report stated that the extension of the off-payroll working rules (commonly known as IR35) to the private sector, put too great a burden on businesses and was unfair on contractors. It concluded that that the Government should use this extra time to completely rethink the legislation.

Lord Forsyth of Drumlean, chair of the House of Lords Economic Affairs Finance Bill Sub-Committee, said: “Our inquiry found these rules to be riddled with problems, unfairnesses, and unintended consequences. The potential impact of the rules on the wider labour market, particularly the gig economy, has been overlooked by the Government. It must devote time to analysing all of this. A wholesale reform of IR35 is required”.

Changes to Off-Payroll Working / IR35 rules in the Private Sector

You may remember that in April 2017, the Government reformed the off-payroll working rules in the public sector.

In 2018 the Government announced the reformed rules would be extended to the private sector in April 2020. However, this has now been delayed to April 2021.

As it currently stands, from 6 April 2021, medium and large-sized private sector businesses that employ the services of a contractor through an intermediary, often known as a personal service company (PSC), will be responsible for determining their employment status and paying income tax and NICs under PAYE to HMRC.

We will of course keep you posted on any updates / changes to the legislation.

Payroll Legislation Guide

Keeping up with payroll legislation changes is hard work. Just when you think you’re compliant – there’s something new to remember! You can download our comprehensive Payroll Legislation Guide for details of all the payroll legislation changes you need to be aware of in an easy-to-read format.

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About the author

Hannah Booth

About the author

Hannah Booth

A graduate of Lancaster University and holder of a Professional Certificate and CAM Diploma in marketing and digital marketing, Hannah is our Communications & Content Manager. Hannah is responsible for all customer communications for Moorepay, and for leading on and producing key content on legislative and industry topics for the Moorepay knowledge centre.

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