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Off-payroll working (IR35) in the private sector

Business Tax - 28 Nov 2018

Important Update: Personal Service Companies and Potential Employers

From April 2020, the government will reform the off-payroll working rules (known as IR35) in the UK’s private sector. This follows a recent implementation of the legislation within the public sector. A major shift in responsibility will take place as the onus for operating the off-payroll working rules will move from personal service companies to the organisation engaging the worker. 

In order to give people and businesses time to prepare, this change will be introduced in April 2020. There will be an exemption available to potential employers (engagers) classed as small, however most organisations that are subject to UK taxes need to review their off-payroll working relationships now.

The off-payroll working rules (IR35) were introduced in 2000 and require that individuals who work like employees, but through personal service companies, pay similar taxes to other employees. At present, individuals who do not comply with the rules can pay significantly less income tax and national insurance contributions than an equivalent employee. 

What does the Reform mean for Businesses?

Where it is determined that the rules do apply, the potential employer will need to deduct income tax and employee’s national insurance plus there will be the additional cost of an employer’s national insurance contribution. 

How Frank Hirth can help?

Frank Hirth can provide support and expert guidance to help the potential employer and personal service companies review the off-payroll working rules to ensure they apply them correctly and avoid the need for a knee-jerk reaction and blanket ‘employment status’ decision. 

Not all off-payroll working relationships will fall within the private sector reform of IR35 and therefore, it is vital that all stakeholders review their specific working relationships. 

We can work with you to ensure that your status is efficiently assessed.
Whether you work via a personal service company or are a potential employer, act now and contact Leigh Collins or your usual Frank Hirth advisor for more details.

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Leigh Collins

Leigh Collins

Senior Tax Manager

T: +44 (0) 20 7833 3500
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Office: London