Understanding the off payroll working rules, also known as IR35, is crucial for individuals and businesses involved in providing services through intermediaries like personal service companies (PSCs). These rules come into play when a worker, using their own intermediary, would be considered an employee if they were providing services directly to the client.
Typically, the responsibility for determining employment status under IR35 shifts from the intermediary to the client receiving the services. This means the client is usually responsible for assessing whether the worker would be an employee if engaged directly. However, if the worker provides services to a small client outside the public sector, the intermediary retains this responsibility.
You may be impacted by these rules if you fall into one of these categories:
- A worker providing services through their own intermediary to a client.
- A client receiving services from a worker through their intermediary.
- An agency or supplier providing workers’ services through their intermediary.
Different rules apply based on whether the client is classified as a small, medium, or large-sized business. In the private and voluntary sectors, a medium or large-sized business is defined as meeting two or more of the following conditions:
- Annual turnover exceeding £10.2 million.
- Balance sheet total over £5.1 million.
- Employing more than 50 individuals.
It’s important to note that certain scenarios fall outside the off payroll working rules. If you suspect these rules may affect you, we’re here to assist in assessing your situation.
If you would like any payroll advice or would like to discuss how to outsource your payroll, please get in touch.
Source: HM Revenue & Customs