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

By Tolley
  • (Updated for Budget 2020)
Off payroll working (IR35) in the private sector ― overview

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?

On 17 March 2020, the Chief Secretary to the Treasury, Stephen Barclay, confirmed that the Government is postponing the reforms to the off payroll working rules (IR35) from April 2020 to 6 April 2021. This will be done through an amendment to the Finance Bill and is in response to the ongoing spread of coronavirus (COVID-19) to help businesses and individuals. To bring all the relevant tax issues together in one easily accessible place, we have a dedicated Tolley COVID-19 Toolkit .

Mr Barclay was clear that this is a deferral, not a cancellation, and said that the Government remains committed to the reforms to ensure that people working like employees, but through their own limited company, pay broadly the same tax as individuals who are employed directly (see Hansard ).

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 (now delayed until April 2021). Draft legislation has been published on GOV.UK . 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 (now delayed until April 2021), where the end client in the private sector is not ‘small’,

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