From the 6th April 2021 the Off Payroll rules will be extended to the private sector, changing the obligations to determine the tax position of those individuals who provide their services to an end user client through a personal service company (PSC).
These changes will mean a PSC will no longer be responsible for complying with the IR35 legislation.
Instead, the end user of the PSC (the client) must assess the IR35 status of each engagement, and if the client determines the engagement to be ‘inside IR35’, the fee-payer must deduct tax and national insurance deductions before remitting the remaining balance to the PSC.
Such changes have been in place for PSC’s operating in the public sector since 2017. HMRC’s aim is to ensure those who provide their services personal through a limited company into the client are not doing so to avoid the payment of the correct levels of PAYE or National Insurance Contributions during that assignment should they be deemed an ’employee’ for tax purposes.
We have been working with our clients to ensure payments made to PSC’s after the 6th April 2021 comply with the new rules.
If you have any questions pertaining to IR35, you can get in touch with our experts.