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Off-Payroll Working

In April 2017 the Government reformed the off-payroll working rules in the Public Sector. The rationale for the change was to increase IR35 compliance within this sector.

The new rules meant that the public authority where the services are provided by the Limited Company (e.g. NHS for a doctor) would be responsible for assessing the employment status and determining whether IR35 applies. Previously, this decision had been determined by the Limited Company providing the services on an assignment by assignment basis (this is still currently the way in the Private Sector).

Where a public authority considered that an assignment was inside IR35 (employed for tax purposes) then the company that pays the worker’s Limited Company (known as the fee-payer) would be responsible for ensuring tax and national insurance contributions are deducted on an employed basis before paying the Limited Company. If the public authority was to consider the assignment to be outside IR35 (business relationship for tax purposes) then the Limited Company would be able to be paid without any deductions being taken by the fee payer to the Limited Company.

In April 2020 the Government announced that these rules will be extended to all medium to large size businesses within the Private Sector, as well as the Public Sector.

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