Off-payroll working

A guide to IR35 changes for HR and payroll professionals in the private sector

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    Executive Summary

    Legislation related to off-payroll working (often referred to as ‘IR35’) ensures that contractors pay the same tax and national insurance (NI) contributions as employees doing equivalent roles and tasks.

    IR35 rules became law in 2000 as part of the Finance Act 2000. Following reviews of IR35 legislation in the early 2010s, in March 2016 the UK government announced that it would tighten regulations around off-payroll working in the public sector. This came into force in March 2017, with the introduction of a new employment status test to determine if IR35 applied to an individual.

    In the October 2018 Budget, the Chancellor announced that the off-payroll working rules would be extended to the private sector in April 2020. In July 2019, it was confirmed that the rules would apply from 6 April 2020, however, in March 2020, the government moved the date one year back to April 2021.

    This guide explains the purpose behind off-payroll working legislation, the changes that are coming into force in April 2021, how these changes will affect employers and contractors, the steps that HR and payroll professionals will have to take to comply with the new regulations, and how CIPHR can help you manage off-payroll working.