The Government has announced a review of changes to off-payroll working rules ahead of their introduction in April this year.
The review – which will gather evidence from affected individuals and businesses to “ensure the smooth implementation of the reforms” – will be carried out by the Treasury.
It comes ahead of major legislative changes designed to clamp down on ‘disguised employment’ scheme.
Under such arrangements, contractors work under a Personal Service Company (PSC) in order to pay less tax, when in fact their working arrangement is similar to that of an employee-employer relationship. However, the new legislation will see employers handed responsibility for assessing whether a worker is paying the correct amount of tax in regards to their role at the company. The employer is also liable when tax is underpaid.
Commenting on the review, Financial Secretary to the Treasury Jesse Norman said: “We recognise that concerns have been raised about the forthcoming reforms to the off-payroll working rules.
“The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible.”
Ahead of the changes, eligible employers should carry out a review of existing contracts with contractors working through PSCs and evaluate their employment status using the CEST tool.
The new rules only apply to medium and large employers who meet at least two of the following criteria:
- The company has a turnover of £10.2 million or more
- The company has a balance sheet total of £5.1 million or more
- The company has 50 employees or more
For help and advice complying with the new off-payroll working rules, please get in touch with our expert team.