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<p>The changes to the off-payroll working rules come into effect on 6 April 2021 and
were legislated for in Finance Act 2020. The off-payroll working rules have been in
place for over 20 years and are designed to ensure that individuals working like employees
but through their own limited company, usually a personal service company or PSC,
pay broadly the same Income Tax and National Insurance contributions as those who
are directly employed.</p><p> </p><p>The off-payroll working changes shift responsibility
for determining an individual's status from the individual's limited company to the
client organisation engaging them. The Government has legislated to ensure there is
a client-led status disagreement process where contractors can lodge a complaint,
if they disagree on how they have been categorised under the off-payroll working rules.</p><p>
</p><p>The Tax Information and Impact Note published at Spring Budget 2021 sets out
that the reform is expected to affect about 60,000 client organisations and 180,000
individuals working through their own limited companies.</p><p>The additional revenue
estimated to be raised by the reform is approximately £3.8bn over the tax years 2020/21
to 2025/26.</p><p> </p><p>The off-payroll working rules do not prevent anyone from
continuing to work through a limited company, or require individuals to move into
employment. However, the Government is aware that some businesses will reconsider
whether PSCs are still the best way to engage individuals who are working like employees.
Some contractors will provide their services in a different way, such as through an
agency or umbrella company, and some organisations may offer individuals permanent
roles instead, where that suits their business needs. These are commercial decisions,
and individuals also have a decision about whether to accept the terms and conditions
on offer to them.</p><p> </p><p>The reform was originally announced at Budget 2018.
Many businesses would have been prepared for the reform to be implemented in April
2020 as originally planned. HMRC have undertaken a significant programme of education
and support to ensure that large and medium-sized businesses are ready to implement
the reform. This includes a series of webinars viewed over 19,000 times since October
2020 as well as more targeted bespoke support, such as one-to-one calls and workshops
with sectors and customer groups where the reform is expected to have the most impact.
HMRC have also worked with representative bodies in specific sectors to reach those
customers. For those customers who still require further assistance, HMRC have a dedicated
helpline to provide assistance with queries related to the off-payroll working rules.</p>
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