Posted: 31, March 2021 by Amy Richardson
The off-payroll working rules (IR35)
From 6th April 2021, the off-payroll working rules can apply if a worker (sometimes known as a contractor) provides their services through their own limited company or another type of intermediary to the client. This rule will apply to all public sector authorities and medium and large-sized private sector clients will be responsible for deciding if the rules apply.
If a worker provides services to a small client in the private sector, the worker’s intermediary will remain responsible for deciding the worker’s employment status and if the rules apply.
An intermediary will usually be the worker’s own personal service company, but could also be any of the following:
- a partnership
- a personal service company.
- an individual
The rules make sure that workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same tax and National Insurance contributions as employees. These rules are sometimes known as ‘IR35’.
The client is the organisation who is or will be receiving the services of a contractor. They may also be known as the engager, hirer, or end client. The client will be responsible for determining if the off-payroll working rules apply.
Who the rules apply to:
You may be affected by these rules if you are:
- a worker who provides their services through their intermediary
- a client who receives services from a worker through their intermediary
- an agency providing workers’ services through their intermediary
If the rules apply, tax and National Insurance contributions must be deducted from fees and paid to HMRC.
The rules apply if a worker provides their services to a client through an intermediary, but would be classed as an employee if they were contracted directly.
You can use the Check Employment Status for Tax service to help you decide if the off-payroll working rules apply.
HMRC have specific guidance pages should you need to use them as a guide: Help and support for off-payroll working - GOV.UK (www.gov.uk)