HMRC have announced a change to the extension of the off-payroll rules (IR35) to the private sector which will now only apply to payments made for services provided on or after 6 April 2020.

The off-payroll rules were introduced in the public sector in April 2017 but for the private sector, the responsibility for determining whether IR35 applies has remained with the taxpayer. This will change from April 2020 for contracts where the end-client is medium or large and it is the end-client who will assess whether the off-payroll rules apply.

Without this concession, the rules would have applied to all payments made on or after 6 April 2020 to private-sector workers caught by the legislation, irrespective of when the services were actually provided.

  • For example, a payment on 6 April 2020 for the week ending 3 April, would have been caught.
  • This will no longer be the case. For example, anyone paid weekly on a Monday in arrears, may not be caught until their 13 April 2020 payday, as such payment is for services provided in the week commencing 6 April.

The change means that end-client organisations will only need to assess whether the rules apply for contracts that will continue past 6 April 2020. It will not need to consider contracts where there would ordinarily be a payment due on or after 6 April for services provided in the current tax year. Since many large organisations are likely to have already ensured that they do not have contracts that span 6 April, the concession should hopefully help to simplify matters for Personal Service Companies (PSCs) and end-clients alike.

Links to our subscriber guides:

Personal Service Companies and tax

IR35: Off-payroll working

Off-payroll working: PSCs & Private Sector Engagers

Employment status

External link:

HMRC press release: change to the off-payroll working rules