*UPDATE: reforms to the off-payroll working rules have been delayed by one year*
The Government is launching a review of changes to off-payroll working rules to address any concerns from businesses and affected individuals about how they will be implemented. The review will determine if any further steps can be taken to ensure the smooth and successful implementation of the reforms, which are due to come into force in April 2020. As part of this, the review will also assess whether any additional support is needed to ensure that the self-employed, who are not in scope of the rules, are not impacted.
Off-payroll working will be a major change for the largest charities when it is introduced. Affected charities should already be preparing for this important change. Full detailed guidance can be found here and members may be interested in a short overview on the issue by CTG Vice-Chairman Richard Bray here.
CTG has already secured clarification on the turnover test for charities, but we would welcome feedback from charities on whether other changes to the implementation of these rules would be helpful.
Off-payroll working rules, known as IR35, were introduced in 2000 to ensure that someone working like an employee, but through a company, pays similar taxes to other employees. The reforms, announced in the 2018 Budget, are designed to tackle non-compliance with off-payroll working rules by making medium and large organisations in the private and third sectors responsible for determining the tax status of contractors. The review will focus on the implementation of these reforms, which are due to come into force on 6 April 2020.
In parallel to the review, HMRC will continue its comprehensive programme of education and support activities, proactively helping customers to prepare for the reform to off-payroll working rules in April 2020. This will include one-to-one engagement, webinars and workshops alongside targeted communications and support for customers, and their representatives to help them prepare for implementation on 6 April 2020.
HMRC has published draft secondary legislation for technical comment. The consultation closes on 19 February 2020.
HMRC has also published
- a technical note about the consultation
- (Draft) Income Tax (Pay As You Earn) (Amendment) Regulations 2020
- (Draft) The Social Security Contributions (Intermediaries) (Miscellaneous Amendments) Regulations 2020
- the outcome of the previous consultation on changes to the off-payroll working rules in April 2020
- a tax information and impact note, draft primary legislation and a draft explanatory memorandum
The release of the draft legislation has occurred before the completion of the review, which is due to conclude by mid-February following a series of roundtables with stakeholders – CTG has attended one of the meetings. We understand that to be a separate exercise so feedback provided to HMRC in the review may only be incorporated, if at all, later in the process