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Changes to off-payroll working from April 2020

Source: HM Revenue & Customs | | 01/10/2019

The rules for individuals providing services to the public sector via an intermediary such as a Personal Service Company (PSC), changed from April 2017. The new rules shifted the responsibility for deciding whether the intermediaries’ legislation applies, known as IR35, from the intermediary to the public sector receiving the service.

In the 2017 Autumn Budget, the Government announced plans to extend these rules to off-payroll working in the private sector. The new rules come into effect from 6 April 2020. The changes are expected to raise over £1.1bn for the public purse in 2020-21. From this date, all medium and large-sized clients will be responsible for deciding the employment status of workers.

The changes mainly apply to businesses with an annual turnover of more than £10.2 million (known as the simplified test). If the simplified test does not apply, then the rules still apply if the private sector client meets 2 or more of the following conditions:

  • an annual turnover of more than £10.2 million
  • a balance sheet total of more than £5.1 million
  • more than 50 employees

If you meet the conditions above, you must start applying the rules when the changes come into force on 6 April 2020.

 

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McAllisters is a partnership trading from Paxton House, 11 Woodside Crescent, Glasgow providing accountancy and tax services and general business advice and is a member of ICAS (Registration No 0342) and an FCA exempt professional firm (No 301235). Its VAT number is 261 3019 94

McAllisters (Scotland) Ltd is a related business providing tax and business advisory services to McAllisters and its clients. McAllisters (Scotland) Ltd is registered in Scotland (Registration number SC146856). Its VAT number is 624 0564 62.

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