As part of the package of measures aimed to help people as a result of COVID-19, HM Treasury have said they intend to postpone the introduction of the Off-Payroll Working rules to the private sector.
Extension of Off-Payroll Working: deferred
- The extension of the Off-Payroll Working rules was due to commence on 6 April 2020. The start date will now be deferred to 6 April 2021.
- Speaking in the House of Commons on the evening of 17 March, Chief Secretary to the Treasury Stephen Barclay stressed that this was a deferral, and not a cancellation, to help businesses and individuals in response to the ongoing spread of the virus.
- The deferral was officially announced by the Financial Secretary to the Treasury on 18 March.
Off-payrolled public sector workers: furloughing
It initially appeared unlikely that contractors who work for the public sector would would not need to be furloughed, under the COVID-19 Employee Job Retention Scheme as their work is on-going.
In March 2020 the Cabinet Office released a paper setting out the circumstances under which certain public sector contractors, 'contingent workers' may be eligible to be laid off and paid under the scheme:
- If their contract is ongoing and they are unable to work due to sickness, self-isolation, or the temporary closure of offices or other workplaces and working from home is not possible they may be furloughed.
- The scheme can apply to those working on PAYE, through umbrella companies and via a Personal Service Company.
- It will not apply if their contract simply comes to an end and is not extended due to COVID-19.
- The paper sets out how such workers should complete timesheets whilst on furlough to reflect the fact that the scheme covers 80% of pay, or £2,500 per month, whichever is lower.
- See Cabinet Office paper: PPNO2_20-Contingent Workers impacted by COVID-19
IR35 workers: Furloughing
- A sole director/shareholder working for their own Personal Service Company (PSC) may furlough themselves in respect of their employment duties;
See COVID-19 Employee Job Retention Scheme
- There are potential problems in terms of the amount of the employee retention grant available if you are not on your own payroll or do not pay market rate salaries.
See COVID-19: Company directors & shareholders
IR35: Off-Payroll Working & SSP
- Following the government's announcement to postpone the introduction of the Off-Payroll Working rules to the private sector, all workers providing their labour via their own PSC to private sector end clients, will be entitled, as they are currently in 2019-20 above to claim SSP under the current rules, via their own PSC.
- The extension of the Off-Payroll Working rules was due to commence on 6 April 2020. The start date will now be deferred to 6 April 2021.
See COVID-19: Company directors & shareholders
Links to our subscriber guides
COVID-19: Government support tracker.
Personal Service Companies (PSC) tax
A Personal Service Company (PSC) derives its income from the activities of one individual. It is also a close company for tax purposes.
Off-Payroll Working: PSCs & Private Sector Engagers
The Off-Payroll Working rules only apply in cases where, if you worked directly for the end client you would be deemed to be its employee in terms of the employment status tests.
Employment status
The employment status of an individual worker depends on whether the individual is engaged by the engager under a 'contract of service', or a 'contract for services'.
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