Off-payrolling to be extended to the private sector

From April 2017, new off-payroll working rules were introduced in the public sector which transferred the responsibility to account for PAYE/NIC from the individual to the engager (or fee payer if someone else paid the contractor). It was widely expected that the reforms would be extended to the private sector, possibly as early as April 2019.

In his budget speech on 29th October 2019, the Chancellor confirmed that the off-payrolling rules would be extended to the private sector with effect from April 2020. In addition he stated that it would only apply to medium and large organisations.

Those organisations who will be caught by the new rules will be relieved that the new measures are NOT to be introduced from April 2019. Clearly the Government has listen to the numerous representations on this point. It would, however, be a mistake, to think that organsiations have plenty of time to prepare. Those organisations who have not started their preparations should now start to consider how the rules will affect them and estimate the likely extra cost.

The Government also published the Summary of responses to the Off-Payroll working in the private sector consultation. The Government "intends to extend the reforms to the off-payroll rules. A further consultation on the detailed operation of the new rules will be published in the coming months. This consultation will inform the draft Finance Bill legislation, which is expected to be published in Summer 2019. The new rules will be given effect from 6 April 2020"

and

"HMRC will continue to work with stakeholders to improve the CEST digital service and the detailed employment status guidance. Enhancements to CEST will be introduced in advance of the new rules coming into force."