HM Revenue and Customs
HMRC announces change to the off-payroll working rules
- Also published by:
- HM Treasury
As part of a review into changes to the operation of the off-payroll working rules (IR35), HMRC has made an announcement to give business more time to prepare.
Changes to the operation of the off-payroll working rules will only apply to payments made for services provided on or after 6 April 2020, HMRC has announced today ahead of the publication of the government’s review.
The formal publication of a review into the implementation of changes to the off-payroll working rules is due to conclude in February.
A common issue raised over the course of the review has been businesses’ concerns over what payments the rules apply to and from when. The government has listened and taken action early to give businesses certainty and more time to prepare to ensure the smooth and successful implementation of the reforms that come into force in April.
The rules, also known as IR35, will now apply only to payments made for services provided on or after 6 April 2020. Previously, the rules would have applied to any payments made on or after 6 April 2020, regardless of when the services were carried out. It means organisations will only need to determine whether the rules apply for contracts they plan to continue beyond 6 April 2020, supporting businesses as they prepare.
This is set out in updated guidance in the Employment Status Manual.
The off-payroll working rules have been in place since 2000. They are designed to make sure that an individual who works like an employee, but through their own limited company, pays broadly the same Income Tax and National Insurance contributions as those who are employed directly.
The government is extending the 2017 reform of the operation of the rules in the public sector to all medium and large organisations in April 2020. This will shift responsibility for operating the rules to the organisation that engages the worker. This is how employment status for tax is decided for the vast majority of people, who do not work through their own company.
- HMRC is making businesses aware of this announcement through updated guidance and in its ongoing education and support products
- HMRC will also write to those that have already attended webinars or one-to-one engagements to explain the change
- Public sector organisations already applying the off-payroll working rules will not be affected by this change
- Contractors can find information about changes to the off-payroll working rules in HMRC’s Contractor Factsheet
Latest News from
HM Revenue and Customs
Protections for working parents eligible for childcare support27/10/2020 11:22:00
Eligibility extended for parents eligible for 30 hours and Tax-Free Childcare offers.
Just 100 days left for Self Assessment26/10/2020 09:10:00
HM Revenue and Customs is reminding Self Assessment customers to complete their tax return before the deadline of 31 January 2021.
54,800 customers claim tax relief for working from home14/10/2020 15:20:00
From 6 April 2020, employers have been able to pay employees up to £6 a week tax-free to cover additional costs if they have had to work from home.
HMRC urges universities to warn new students of tax scams danger06/10/2020 11:10:00
HMRC has written to universities, through Universities UK, asking them to help ensure their students know how to spot a scam.
Self Assessment customers to benefit from enhanced payment plans02/10/2020 11:10:00
HMRC has increased the threshold for paying tax liabilities to £30,000 for Self Assessment customers to help ease any potential financial burden they may be experiencing due to the coronavirus (COVID-19) pandemic.
Support service for Northern Ireland trade goes live28/09/2020 16:20:00
The government is urging businesses to sign up to new Trader Support Service with fewer than 100 days until end of Transition period.
HMRC to accept service of legal proceedings by email25/09/2020 14:48:00
The service of new legal proceedings and pre-action letters on HMRC should be via email during the coronavirus (COVID-19) pandemic.
Performance update: HMRC’s response to coronavirus27/08/2020 12:05:00
HM Revenue and Customs (HMRC) went through a unique first quarter in the 2020 to 2021 financial year.