Extension of the Off-Payroll Rules to the private sector: factsheet for clients

V3: September 2020

The government is extending the off-payroll rules, which have applied in the public sector since April 2017, into the private sector. The new rules will apply to payments made to intermediaries such as personal service companies (PSCs). Importantly, the tests for IR35 status are not changing but the responsibilities for making the IR35 status decision and deducting tax and national insurance are.

What’s the difference? From 6 April 2021, the PSC will no longer be responsible for managing IR35. Instead, the client must assess the IR35 status of each engagement, and if the client finds that the engagement is 'inside IR35', the fee-payer must deduct tax and national insurance before paying the PSC.

When: The new rules will apply to payments made to PSCs for work done on or after 6 April 2021.