When Will Off-Payroll Working in the Private Sector Take Effect?
6 April 2021
The changes to off-payroll working rules (IR35) for non-public sector organisations take effect from 6 April 2021.
About Off-Payroll Working Rules
In April 2017, the government reformed the off-payroll working rules in the public sector. This shifted the responsibility for determining employment status from the individual working through the intermediary to the public authorities engaging them. In addition, the reform made the public authority or agency that pays the worker’s intermediary responsible for accounting for and paying income tax and NICs under PAYE to HMRC, on behalf of the worker.
In 2018 the government announced the reformed rules would also be extended to medium and large organisations in the private sector in April 2020 which has now been postponed to April 2021.
What This Means for the Private Sector
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.
This change had been due to take place on 6 April 2020 but was postponed until 6 April 2021 in view of the Coronavirus (COVID-19) pandemic.
HMRCs Check Employment Status Tax tool (CEST) is already available for organisations and contractors to consider the appropriate employment status for contracts running beyond 6 April 2021.
HMRC will stand by the results given by the CEST tool, provided it is used in accordance with our guidance and the information entered is accurate, and remains accurate. This is regardless of when the tool is used ahead of April 2021. This means you can already use the tool for engagements that start in April 2021 onwards.
Do you know when the latest complex legislation changes come into effect? And are you aware of the work required to ensure your business is fully compliant? This guide includes advice on employment law updates as they happen, with month-by-month advice on all updates in an easy-to-read format.