CIPP webcast - off-payroll working in the private sector from April 2020 5 June 2019
Diana Bruce, CIPP Senior Policy Liaison Officer, covers key changes proposed in the latest consultation and looks at the practical application of the new rules for off-payroll working in the private sector from April 2020.
This webcast will also be useful for anyone in the public sector as any changes brought in for the private sector will apply equally to engagements in the public sector from April 2020.
The CIPP response to the latest consultation is referred to in the webcast; this can be accessed here or in the consultation area of the CIPP policy hub.
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Finance Bill 2019-20 confirms start date for private sector off-payroll 12 July 2019
The Government has published 2019-20 Finance Bill draft legislation and measures which confirm that the reforms to off-payroll working in the private sector for medium and large businesses will come into effect from April 2020, as previously announced.
The reform will make organisations responsible for determining whether the existing rules apply to the contractors they hire and ensuring the necessary employment taxes are paid.
This measure will have effect for contracts entered into, or payments made, on or after 6 April 2020.
As announced at Budget 2018, outside the public sector, this change will only apply to medium and large-sized organisations. The draft legislation makes clear when non-public sector organisations, including unincorporated organisations, will be considered to be small and therefore not within the scope of the reform. The draft legislation also includes provisions to ensure that all parties in the labour supply chain are aware of the organisation’s decision and the reasons for that decision, and will introduce a statutory, client-led status disagreement process to allow individuals and fee-payers to challenge the organisation’s determinations. Legislation has been introduced in the Finance Bill 2019 to amend ITEPA 2003 and relevant National Insurance contributions regulations, so that where an individual works for a medium or large-sized engagers outside of the public sector, through their own PSC and falls within the rules, then: • the party paying the worker’s PSC (the ‘fee-payer’) is treated as an employer for the purposes of Income Tax and Class 1 National Insurance contributions • the amount paid to the worker’s intermediary for the worker’s services is deemed to be a payment of employment income, or of earnings for Class 1 National Insurance contributions for that worker • the party paying the worker’s intermediary (the ‘fee-payer’) is liable for secondary Class 1 National Insurance contributions and must deduct tax and National Insurance contributions from the payments they make to the worker’s intermediary in respect of the services of the worker • the person deemed to be the employer for tax purposes is obliged to remit payments to HMRC and to send HMRC information about the payments using Real Time Information (RTI).
HMRC consulted on the detail of the reform between 5 March and 28 May 2019 and in April 2019 published guidance on the actions engagers can take to prepare for the reform. The guidance on how to prepare still applies:
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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