The Chancellor has confirmed in the 2018 Budget that the off-payroll rules will be extended to the private sector but will be delayed until 6 April 2020 and will only apply to large and medium-sized organisations. The definition of medium and large businesses for these purposes has not yet been published. The rules mean that when medium or large businesses hire consultants through personal service companies (or chains or intermediaries), a deemed employment relationship may be created for tax purposes. Businesses will need to decide whether the off-payroll working rules apply.
Where the rules do apply, the business, agency or third party paying an individual’s personal service company or intermediary will be responsible for accounting for PAYE and employees’ National Insurance contributions (NICs) and for paying employer’s NICs.
The existing IR35 rules in the private sector, where the individual’s personal service company or intermediary is required to consider the off-payroll working rules, and to apply those rules when they do, will continue to apply for small businesses.