Off-payroll working rules
The off-payroll working rules changed on 6 April 2021.
If your clients are medium and large sized organisations who engage contractors through their own limited company or other intermediary, they should now be operating the rules. Agencies of any size who supply contractors in this way also have responsibilities.
HMRC have new support available for those who are affected by the changes to the rules.
A new flow chart for client organisations to help you understand if the rules apply to you.
A webchat on off-payroll if you want to talk to HMRC directly.
For those who have decided to reconsider how they offer contractors roles, HMRC have published new guidance on working through an umbrella company.
We are working to identify any sectors who may benefit from further support and will be delivering additional workshops for the construction sector, which will be advertised through stakeholders. If the sector you work in could benefit from additional support on the changes to the rules then get in touch by emailing firstname.lastname@example.org.
You can continue to use all HMRC’s other guidance, as well as their free, digital Check Employment Status for Tax (CEST) tool to help with employment status decisions. The CEST Landing Page has recently been updated to reflect the changes to the off-payroll working rules that took effect on 6 April 2021. The tool itself and the decision it gives has not changed.
HMRC’s programme of live webinars on the general rules, status decisions, when the rules apply, fee-payers and international issues has now ended, but you can continue to access recordings of all 6 webinars on our help and support page.
Consider how the changes affect your organisation
Some organisations have found it helpful to form an internal working group to consider the rules and review their procedures.
Upskill those responsible for making decisions: you may want to implement a central decision-making process, and you need to make sure decision makers have the training they need, and all relevant departments are included in the decision process.
Review current workforce: Many organisations are using digital tools to help them with employment status decisions. You can use HMRC’s Check Employment Status for Tax (CEST) tool or another tool to make employment status decisions.
Talk to your contractors: you should provide a status determination statement to your contractors if they are inside the rules, as well as the agency you engage with. Agencies should also pass status determination statements onto the next agency they engage with. You may also wish to share a status determination statement if a contractor is outside the rules, and you should talk to your contractors about your processes as well as your decisions.
Operate PAYE where appropriate
For all engagements inside the rules PAYE needs to be operated by the agency who pays the contractors limited company or other intermediaries’ fees or, if there are no agencies in the supply chain, you need to operate PAYE.
Use the Real Time Information (RTI) flag if an engagement is inside the off-payroll working rules, and you are responsible for deducting Income Tax and National Insurance contributions on payments to the contractor’s intermediary, you must use the ‘off-payroll worker subject to the rules’ indicator in RTI. The name of this indicator may be reflected differently in your payroll software.
Have a clear process in place for disagreements: HMRC know some organisations have done this by creating an internal team to make sure disagreements are handled in a fair and consistent way.
There is a legal requirement to maintain an audit trail.
Use the resources and guidance available on off-payroll working guidance.
Security update - extra login security step for some businesses and organisations
HMRC are making Multi Factor Authentication (sometimes known as 2-Step Verification) a requirement for all businesses and organisations using Government Gateway to access HMRC services online.