- Off-Payroll working rules before 6 April 2021: Before 6 April 2021, if the contractor / intermediary's worker provides services to a client (deemed employer) through the contractor / intermediary in the:
- Public sector, the client must decide the contractor / intermediary's employment status
- Private sector, the contractor / intermediary must decide worker's status
Off-Payroll working rules from 6 April 2021: All public sector clients and medium or
large-sized private sector clients will be responsible for deciding the
contractor / intermediary's worker's employment status. This includes some
charities and third sector organisations.
If the off-payroll working rules apply, the contractor / intermediary's worker's fees will be subject to Income Tax and National Insurance contributions.
RTI Flag - Off-Payroll Worker subject to the rules: Data Item # 208 in the Full Payment Submission
(FPS) - is the Off-Payroll Worker Indicator field. If this indicator is "Yes", then Student Loan or Postgraduate Loan deductions should not be made or reported.
The worker will not be entitled to Statutory Payments (SAP, SSP, SMP, SPP, ShPP or SPBP) and is not subject to auto-enrolment into a workplace pension.
- Off-Payroll Workers Key Terms
- 1 Off-payroll worker: An "off-payroll worker" is a worker that provides their services through their own intermediary.
- 2 Intermediary: An intermediary will usually be the worker's own personal service company, but could also be any of the following:
- a partnership
- a personal service company
- an individual
- 3 IR35: Off-payroll working rules applicable to contractors or intermediaries whose workers provide services to clients, i.e. to medium or large-sized non-public sector organisations, or to public sector organisations.
- 4 Deemed Employer: The person responsible for deducting income tax and NICs on payments to the worker's intermediary is known as the "deemed employer". Also known as "fee payer".
- 5 PSC: Personal Service Company.
- 6 CEST: Check Employment Status for Tax (CEST) tool.
HMRC's Check Employment Status for Tax (CEST) tool can be used when deciding whether the
off-payroll working rules apply to an engagement.