Off-payroll Working (IR35)

Off-payroll working rules, frequently known as IR35, is legislation allowing HMRC to collect additional payments where a worker provides their services through an intermediary to another person or entity. The intermediary will usually be an individual, a partnership, an unincorporated association or a company. 

From 6^th April 2020 Off-payroll working rules are changing; all public sector authorities and medium and large private sector clients will be responsible for deciding a worker’s employment status.  The private sector includes third sector organisations, such as some charities. 

If the Off-payroll working rules apply, the fee payer (the public authority, agency or other third party who is responsible for paying the worker’s intermediary) must:

• Calculate a deemed direct payment to account for employment taxes associated with the contract

• Deduct those taxes from the payment to the worker’s intermediary

• Report taxes deducted to HMRC through RTI Full Payment Submission (FPS)

• Pay the relevant Employer’s NICs

Off-payroll Workers do not qualify for:

• Statutory payments

• Automatic enrolment

• Student or Postgraduate Loans repayment through payroll

Here are some useful links with further HMRC guidance with regards to off-payroll working:

• Understanding-off-payroll-working-ir35

• Fee-payer-responsibilities-under-the-off-payroll-working-rules

• Private sector off-payroll working for intermediaries

• Public sector off-payroll working for clients

• Preparing-for-changes-to-the-off-payroll-working-rules-ir35