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Off-payroll in the private sector

Julian Ball

Julian Ball | Legal Director

Thursday 24th Jan, 2019

Most contractors which use PSCs are now aware that there will be changes to off-payroll working in the private sector from April 2020, although not everyone is sure how the changes will affect them.

This is why, over the coming year, we will be publishing updates in our newsletters and on the PayStream website about how the recruitment industry is preparing for the changes.

You can already access our simple guide to IR35 here and some examples of what helps your IR35 status here.

We will be helping agencies prepare for the changes by running seminars and webinars. These will not only give an explanation of the changes but will also include helpful hints around reinforcing IR35 status.

In a nutshell, from April 2020, clients* will be expected to let recruitment agencies know whether a role is inside or outside IR35. If inside, the recruitment agency will not be able to pay the PSC gross but will have to deduct employed levels of tax from the payments to PSCs (or perhaps refer the contractor to an umbrella solution). This will largely remove any tax benefit of working through a PSC.

We will be helping agencies prepare for the changes by running seminars and webinars. These will not only give an explanation of the changes but will also include helpful hints around reinforcing IR35 status.

We have built an IR35 portal which will make it easier and simpler for contractors to have their IR35 status reviewed. It will also allow us to grant access to agencies to the IR35 review results. This is important because we expect many agencies will want to see a “pass” result before they are willing to pay PSCs gross. Over the course of this year we will take feedback on the IR35 portal and, where appropriate, update the portal so that it works seamlessly for all parties by 2020.

Draft legislation will be published in the summer which is expected to reflect the off payroll rules introduced last year in the Public Sector. We will update you as soon as it is published.

 

*there will be an exemption for small businesses – details will be confirmed by the Government in the summer.

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Related article - IR35 - Our advice

IR35 is a piece of tax legislation introduced in July 2000 to target disguised employment. It uses a set of tests to find out if someone is genuinely in business on his own account or a disguised employee of the client.

Read more here
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