Off-payroll working rules continue to apply

With all the U-turns on tax policy in the last couple of months, businesses may be confused about what changes are going ahead and which ones have been scrapped by the new chancellor.

One of the controversial announcements in the mini-budget on 23 September was the abolition of the off-payroll or IR35 rules that apply when workers are engaged via an intermediary, typically their own personal service company (PSC). This was due to take effect from 6 April 2023, restoring the tax rules to the pre-6 April 2017 position and would have reduced the compliance burden on end-user organisations. However, this is one of the many measures that was scrapped by Jeremy Hunt, so the current rules continue to apply.

In summary, public-sector bodies and large and medium-sized organisations will still need to decide the employment status of every worker who supplies their services through their own intermediary (PSC), even if they are provided through an agency. Whether the organisation qualifies as large or medium-sized is determined by the criteria set out in the Companies Act. 

If the off-payroll working rules apply to the relationship, they are required to communicate the worker’s employment status determination to them and the fee-payer by using a Status Determination Statement (SDS). Please see our website here for a model Status Determination Statement. If the end-user organisation is also the fee-payer, they will need to deduct and pay Income Tax and National Insurance contributions to HMRC.

HMRC suggest that end-users utilise the Check Employment Status for Tax service to help them decide if the off-payroll working rules apply to them.

For detailed guidance see: April 2021 changes to off-payroll working for clients - GOV.UK.

Further help

• Please visit the IR35 Legislation section of our Advice Hub for insights and updates
• If you have a question relating to off-payroll working, please get in touch by sending an email to enquiries@torgersens.com.

About the Author

Martin Johnson

Partner

With expertise in advising family-owned companies on a range of tax, accountancy and business issues, Martin also has an in-depth knowledge of the automotive and property sectors. In addition, he provides advice on inheritance tax planning and financial management to owner-managed businesses.  Martin leads the firm in developing its expertise in the buy-to-let sector, advising both residential and commercial property owners on relevant tax and legislation issues. A further element to Martin’s role is to build Torgersens’ relationships with banks, financial advisors and specialists in commercial and employment law to ensure that the firm’s clients have access to market-leading guidance.  

To get in touch please e-mail martin.johnson@torgersens.com.