Off payroll working (IR35) in the private sector ― overview

By Tolley
  • (Updated for Budget 2020)

The following Employment Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Off payroll working (IR35) in the private sector ― overview
  • Overview
  • Intermediary employers affected
  • Obligations of client
  • Client-led status disagreement process
  • Implications for the intermediary
  • Implications for the worker
  • What happens where the intermediary is a partnership?

The Government has treated public sector bodies which engage workers via an intermediary as responsible for assessing employment status and, consequently, for PAYE to be operated on relevant payments since 6 April 2017. At the Budget 2018, it was announced that these rules will apply to large and medium businesses in the private sector from 6 April 2020. Draft legislation has been published on GOV.UK Opens in a new window. This draft legislation not only extends the current legislation to medium and large companies in the private sector; it also makes amendments to requirements for communication and compliance. The legislation will amend or insert ITEPA 2003, ss 48, 50 and add ITEPA 2003, ss 60A–61TA.

Small companies in the private sector will not be subject to these rules; intermediaries supplying workers to small companies in the private sector will remain responsible for assessing the employment status of those workers and any PAYE due.


From 6 April 2020, where the end client in the private sector is not ‘small’, the client is required to assess employment status. This means that it needs to make a decision as to whether a worker supplied by an intermediary would be its employee or office-holder if engaged directly. The definition of ‘small’ and who is affected by these rules is set out in the Small companies ― who is affected by off payroll working (IR35) in the private sector guidance note. In this case, ‘the private sector’ means any entity not considered to be in the public sector and therefore already covered by similar rules from April 2017. The private sector therefore includes, for example, the third sector. See the Off payroll working (IR35) in the public sector ― overview guidance note for details of the