From April 2017 there are changes to the way the Intermediaries Legislation (known as IR35) is applied to off-payroll working in the public sector. Where the rules apply, people who work in the public sector through an intermediary will pay employment taxes in a similar way to employees. An intermediary can be the worker’s own limited company, such as a personal service company (PSC), a partnership of which the worker is a partner, or another individual.
The council will be required to assess such workers prior to engagement and, depending on the results, in certain cases will be required to make deductions for tax and National Insurance from the worker’s invoice before paying the remaining balance.
This will apply to any current or future workers’ payments from April 2017. It will be the responsibility of the manager engaging the worker to carry out the assessment using HMRC’s Employment Status Service (ESS) tool prior to engagement, and ensure the correct processes are followed to set up and pay the worker.
Workers employed directly by companies or agencies which are not their own are not included within these regulations as they are taxed directly by the company or agency they are employed by.
Visit GOV.UK to find out more about IR35 and whether you will be affected.