Get up to speed with new off-payroll working rules

Ahead of the introduction of the new off-payroll working rules, HM Revenue & Customs (HMRC) has published a factsheet outlining the changes and what they mean for small businesses.

Under the legislation, officially known as IR35, employers will be held responsible for determining a contractor’s employment status.

It comes after reports that some contractors worked through an intermediary, such as a personal service company (PSC), to pay less taxes, even though they were working as if they were employed by the business. This is known as a ‘disguised employment scheme’.

Coming into effect on 06 April 2020, the new rules will also make employers liable for any underpaid tax should they incorrectly determine a contractor’s employment status.

Commenting on the rules, HMRC said: “To increase compliance with the existing off-payroll working rules (often known as IR35), medium and large organisations in all sectors of the economy will become responsible for assessing the employment status of individuals who work for them through their own limited company.”

Do note, the new legislation only applies to medium and large businesses who meet at least two of the following criteria:

  • The company has a turnover of £10.2 million or more
  • The company has a balance sheet total of £5.1 million or more
  • The company has 50 employees or more

To access the off-payroll working rules factsheet, click here.

For help and advice complying with the new off-payroll working rules, please get in touch with our expert team.