Accounting and Taxation advice in Hexham, Northumberland

More...

Off-payroll working in the private sector

The changes to the off-payroll working rules (commonly known as IR35), which came into effect in April 2017 for the public sector, will be extended to the private sector from April 2021. Draft legislation has been issued. The new rules apply to payments made for services provided on or after 6 April 2021. The new rules were due to apply from April 2020 but were postponed in an announcement by the Government in March 2020.


The off-payroll working rules apply where an individual (the worker) provides their services through an intermediary (typically a personal service company) to another person or entity (the client). The client will be required to make a determination of a worker’s status and communicate that determination. In addition, the fee-payer (usually the organisation paying the worker’s personal service company) will need to make deductions for income tax and NICs and pay any employer NICs.


Only medium and large businesses will be subject to the 2021 rules, so small businesses will not need to determine the status of the off-payroll workers they engage. A small company is one which meets two of these criteria: its annual turnover is not more than £10.2 million: it has not more than £5.1 million on its balance sheet: it has 50 or fewer employees. For unincorporated organisations it is only the annual turnover test that applies.


Review
In January 2020, the government announced a review of the implementation of the original April 2020 reform, to address concerns from affected businesses and individuals. The government has confirmed the changes will go ahead but:

  • businesses will not have to pay penalties for errors relating to off-payroll working in the first year, except in cases of deliberate non-compliance
  • there will be a legal obligation on clients to respond to a request for information about their size from the worker or the fee-payer.

 

Latest News

Thoughts for the week ending 28th August

Hi folks,I think this is going to be the last weekly ‘Thoughts’ - whether it’s… more >

MAKING TAX DIGITAL (MTD)

Are you ready?

You may well need to prepare your business for this fundamental HMRC change to the tax system.... more >

About Us

Meet the team

Patricia J Arnold & Co Ltd was founded in 1985 to provide accounting and taxation advice... more >

Services

Services

We provide a professional and friendly service tailored to individuals, partnerships... more >