Since 2017, public sector organisations have been responsible for determining employment status of someone working through their own intermediary but also working for them. Commonly this is where they are operating as a personal service company (PSC). If their employment status is broadly the same as that of an employee, they are determined as having a status of a deemed worker (or deemed employee) then, to put it simply, then need to be paced on the payroll for the calculation of tax, National Insurance and apprenticeship levy. So they were off the payroll but now need to be on the payroll, hence the terminology “off-payroll” working.
The Budget in 2018 announced that this employment status obligation would be passed to the private sector. A consultation followed and on the 11th of July 2019 a summary of responses was published. This has confirmed that the off-payroll rules will be extended to all medium and large organisations in the UK from the 6th of April 2020. It was not apply to “small” organisations who are defined as meeting 2 of the following qualifying conditions:
- Annual turnover not more than £10.2m
- Balance sheet total not more than £5.1m
- Not more than 50 employees.
These conditions have to be met in two consecutive years to remain outside of “off-payroll” rules. Although that is not always the case!
The Global Payroll Association has run several webinars on the roll-out of off-payroll to the private sector and we will continue to do so. It is so important that employers recognise is they are in scope of the new rules and, if they are, who of their workers will be caught. We advise readers to keep an eye out for our future webinars or download previous ones.
The purpose of this news piece is to point readers to a lot of information they will find helpful to prepare:
- HMRC’s policy paper
- The draft legislation in the Finance Bill
- The explanatory note to the legislation
- The off-payroll working rules from April 2020: Factsheet
- The Check Employment Status for Tax (CEST) service
- Apply the off-payroll working rules in the private sector guidance
Global Payroll Association Comment
Employers are advised to read and prepare. Although there are estimated to be 1.5 “small” organisations outside of the rules, there are many more that will fall insider the rules. Guidance will continue to come from HMRC and we will ensure that we pass this onto employers.
This is something that cannot be ignored and is now firmly on the legislative agenda.
Since 2017, public sector organisations have been responsible for determining employment status of someone working through their own intermediary but also working for them. Commonly this is where they are operating as a personal service company (PSC). If their employment status is broadly the same as that of an employee, they are determined as having a status of a deemed worker (or deemed employee) then, to put it simply, then need to be paced on the payroll for the calculation of tax, National Insurance and apprenticeship levy. So they were off the payroll but now need to be on the payroll, hence the terminology “off-payroll” working.
The Budget in 2018 announced that this employment status obligation would be passed to the private sector. A consultation followed and on the 11th of July 2019 a summary of responses was published. This has confirmed that the off-payroll rules will be extended to all medium and large organisations in the UK from the 6th of April 2020. It was not apply to “small” organisations who are defined as meeting 2 of the following qualifying conditions:
- Annual turnover not more than £10.2m
- Balance sheet total not more than £5.1m
- Not more than 50 employees.
These conditions have to be met in two consecutive years to remain outside of “off-payroll” rules. Although that is not always the case!
The Global Payroll Association has run several webinars on the roll-out of off-payroll to the private sector and we will continue to do so. It is so important that employers recognise is they are in scope of the new rules and, if they are, who of their workers will be caught. We advise readers to keep an eye out for our future webinars or download previous ones.
The purpose of this news piece is to point readers to a lot of information they will find helpful to prepare:
- HMRC’s policy paper
- The draft legislation in the Finance Bill
- The explanatory note to the legislation
- The off-payroll working rules from April 2020: Factsheet
- The Check Employment Status for Tax (CEST) service
- Apply the off-payroll working rules in the private sector guidance
Global Payroll Association Comment
Employers are advised to read and prepare. Although there are estimated to be 1.5 “small” organisations outside of the rules, there are many more that will fall insider the rules. Guidance will continue to come from HMRC and we will ensure that we pass this onto employers.
This is something that cannot be ignored and is now firmly on the legislative agenda.