From April 2017 there are changes to the way the current intermediaries legislation (known as IR35) is applied to off-payroll working in the public sector. Where the rules apply, people who work in the public sector through an intermediary will pay employment taxes in a similar way to employees.
These changes will apply to:
- public authorities who hire off-payroll contractors
- public sector tax managers, payroll managers, human resources managers and procurement managers
- agencies and third parties who supply contractors to the public sector
- contractors who provide their services to a public authority through an intermediary
The reform applies to payments made on or after 6 April 2017, including payments made for contracts entered into before that date.
Where the rules apply, the fee-payer (the public authority, agency, or other third party paying the intermediary) will calculate Income Tax and primary (employee) National Insurance contributions (NICs) and pay them over to HMRC. These amounts will be deducted from the intermediary’s fee for the work provided.
Please see the HMRC guidance for further details: https://www.gov.uk/guidance/off-payroll-working-in-the-public-sector-reform-of-intermediaries-legislation
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