[UK] The Off-Payroll Worker Marker

The above marker is new to payroll software from this tax year.  It is to be used when someone is on the payroll but only there because they are subject to the off-payroll rules / IR35.  As the roll-out the private sector was delayed until 2020, there was confusion as to whether employers already operating it in the public sector should use the marker. 

On the 6^th of April 2020, the tax agent’s blog was updated with a post called “Off-payroll working rules (IR35) delay and what that means for organisations and contractors“.  This confirmed that the delay to the private sector meant that it would not be used by those employers then went on:

However, from 11 May 2020 there will be an additional requirement on public authorities, or agencies, for contracts which fall inside the off-payroll working rules. The party paying the contractor's company will be required to start using the PAYE RTI 'off-payroll worker subject to the rules' indicator in payrolling software. While there is no requirement to start using the off-payroll worker indicator on RTI submissions from 6 April 2020, this function will be available and may be used from that date.

We assume that this means it can be used from the 6^th of April 2020 but must be used for payrolls run on and after the 11^th of May 2020. 

On the 8^th of April 2020, software developers were provided with the following advice:

Public sector organisations will continue to operate off-payroll working using the rules introduced in 2017. Public sector organisations should include the OPW indicator (data item 208) on the FPS submissions for any workers operating under off-payroll rules.   Private sector organisations will continue to engage individuals as they currently do and should therefore not be reporting off-payroll workers via RTI. Fee-payers may need to submit an FPS for an off-payroll worker working in the public sector, depending on the worker’s employment status determination and they should use the OPW indicator when doing so.

Global Payroll Association Comment

The Off-Payroll Worker Marker should be used for employers in the public sector that are already operating the off-payroll rules.  Quite why HMRC’s guidance to software developers is different from the guidance to tax agents is strange – software developers are not told anything about the marker operating from the 11^th of May 2020. 

But it is there in software and should be used.

The above marker is new to payroll software from this tax year.  It is to be used when someone is on the payroll but only there because they are subject to the off-payroll rules / IR35.  As the roll-out the private sector was delayed until 2020, there was confusion as to whether employers already operating it in the public sector should use the marker. 

On the 6^th of April 2020, the tax agent’s blog was updated with a post called “Off-payroll working rules (IR35) delay and what that means for organisations and contractors“.  This confirmed that the delay to the private sector meant that it would not be used by those employers then went on:

However, from 11 May 2020 there will be an additional requirement on public authorities, or agencies, for contracts which fall inside the off-payroll working rules. The party paying the contractor's company will be required to start using the PAYE RTI 'off-payroll worker subject to the rules' indicator in payrolling software. While there is no requirement to start using the off-payroll worker indicator on RTI submissions from 6 April 2020, this function will be available and may be used from that date.

We assume that this means it can be used from the 6^th of April 2020 but must be used for payrolls run on and after the 11^th of May 2020. 

On the 8^th of April 2020, software developers were provided with the following advice:

Public sector organisations will continue to operate off-payroll working using the rules introduced in 2017. Public sector organisations should include the OPW indicator (data item 208) on the FPS submissions for any workers operating under off-payroll rules.   Private sector organisations will continue to engage individuals as they currently do and should therefore not be reporting off-payroll workers via RTI. Fee-payers may need to submit an FPS for an off-payroll worker working in the public sector, depending on the worker’s employment status determination and they should use the OPW indicator when doing so.

Global Payroll Association Comment

The Off-Payroll Worker Marker should be used for employers in the public sector that are already operating the off-payroll rules.  Quite why HMRC’s guidance to software developers is different from the guidance to tax agents is strange – software developers are not told anything about the marker operating from the 11^th of May 2020. 

But it is there in software and should be used.