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Off-Payroll Rules To Go Private In 2020

12 July 2019
Zara Woodcock
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Companies have only nine months to prepare for the changes to off-payroll working rules, which are now being extended to the private and third sectors, with HMRC publishing draft legislation yesterday.

From April 2020 private sector firms will have to check whether contractors will need to pay income tax and national insurance contributions, shifting the responsibility of checking from contractors to the organisation hiring them.

Those most likely to be affected include individuals supplying their services through a personal service company (PSC), medium/large companies outside the public sector that engage with individuals through PSCs, and recruitment agencies.

The reformed rules – known as IR35 – have been in place since 2017. But the new draft Finance Bill posted yesterday states that private sector firms that enter into contracts or make payments to workers engaged through a PSC after 6 April 2020 will have to check the workers’ tax status.

The change is expected to affect around 170,000 people working through their own company, as well as up to 60,000 organisations that use workers employed by a PSC.

20,000 recruiters will need to operate payroll for any workers they supply, meaning the recruitment sector will be affected the most.

The change does not apply to the self-employed and is not expected to have any significant macro-economic impacts.

This measure is not expected to have any significant macro-economic impacts.