What is off-payroll working? What is IR35? What are the tax rules for off-payroll working or IR35? How do you check employment status? What is a personal service company?

Off-payroll working is the term used by HM Revenue & Customs (HMRC) to describe the situation where:

When Off-payroll working applies, the top party in the labour supply chain has the obligation to assess employment status and the same or a different party deducts PAYE and National Insurance from the fee paid to the worker's company.

The off-payrolling labour supply chain generally looks something like this:

Worker > PSC > Agency > End Client

There can be numerous agencies or other intermediaries in the chain. e.g.

Worker > PSC > Agency > Agency > Intermediary > End Client

Tax outcomes

Who does what in the chain?

The Off-payroll working rules have different variations which apply as follows, depending on the status of the end client:

End client type Who assesses the worker's employment status Who deducts PAYE/NICs When from
Public sector  End Client Fee payer 6 April 2017
Large or medium-sized private sector  End Client Fee payer 6 April 2021
Large or medium private sector (IR35) PSC PSC Until 5 April 2021
Small private sector (IR35) PSC PSC Ongoing


Off-payrolling working for Public sector clients

Off-payroll working for Large or Medium-sized private sector clients

These now apply from 6 April 2021, having been delayed from April 2020 in March 2020. See IR35 changes postponed for a year due to COVID-19

Off-payroll working for Private sector clients

a) Rules up to 5 April 2021: 

b)  Rules after 6 April 2021: 

Who is responsible for notifying who?

It is always the duty of the end client to assess employment status and pass on that assessment to the fee payer and the worker, unless the end client is a small operation. In that case, the worker's intermediary checks their employment status and applies IR35.

WARNING: If the end client or any other party in the chain fails to pass on the results of the employment status test it will become the deemed employer's fault.

How to check your employment status?

What's new?

See a summary of the latest news in our update: Contractors & PSC Planning: November 2019 what now?
This includes a detailed section on working via an 'umbrella' and added some further tips on what you can do with your company if it ceases trading.