Off-payroll working in the private sector
The government has announced that off-payroll working rules, known as IR35, currently only in the public sector will be rolled out to the private sector as well.
This means that the responsibility for determining whether or not a person working for your organisation should be on the payroll, rather than freelance or contracted will fall to the organisation and not the individual even if the person is hired via a personal service company.
HMRC provide an online tool to help determine if any specific person or role would be considered to be employment. The Check Employment Status for Tax service (CEST) is available here.
If you find that you should have treated persons as employed, they may then be entitled to employment benefits and both your organisation and the individual might need to pay employment taxes (income tax and NICs). As such it is important that once these rules come into effect, you are satisfied of the status of any people hired via personal service companies working for your organisation. It is already important to check this for any individuals you hire as consultants rather than as employees.
The change to include personal service companies is due to come into force from April 2020 but helpfully this will only apply if your organisation is deemed ‘non-small’.
‘Non-small’ organisations are those with two of the following:
• Income over £10.2m
• Gross assets over £5.1m (fixed assets plus current assets)
• Over 50 employees
Further guidance is expected from HMRC in due course.