Off-payroll rules for the private sector

The government has published the draft legislation for the next Finance Bill including the rules for off-payroll working in the private sector. The legislation is open for consultation until 5 September 2019.

The new rules will apply from April 2020 and the effect of these rules, if they apply to intermediaries, typically Personal Service Companies (PSC), will be:

• the medium or large business (or an agency paying the PSC) will calculate a 'deemed payment' based on the fees the PSC has charged for the services of the individual
• generally, the entity that pays the PSC for the services must deduct PAYE and employee National Insurance contributions (NICs) as if the deemed payment is a salary paid to an employee
• the paying entity will have to pay to HMRC not only the PAYE and NICs deducted from the deemed payment but also employer NICs on the deemed payment
• the net amount received by the PSC can be passed onto the individual without the company deducting any further PAYE and NICs.