Guidance

April 2021 changes to off-payroll working for intermediaries and contractors

Understand the changes to the off-payroll working rules (IR35) if you're a contractor or an intermediary and your worker provides services to a client.

An intermediary is usually a limited company and will often be a worker’s personal service company. It could also be a partnership, managed service company, or an individual.

A worker is sometimes known as a contractor.

Off-payroll working rules

From 6 April 2021, all public sector clients and medium or large-sized clients outside the public sector are responsible for deciding your worker’s employment status.

If your worker provides services to a small client outside of the public sector, you (the worker’s intermediary) will continue to be responsible for deciding your worker’s employment status.

If the off-payroll working rules apply, your worker’s fees will be subject to Income Tax and National Insurance contributions.

Working through an umbrella company

The off-payroll  working rules are unlikely to apply if  you are employed by an umbrella company.

Find more information about what umbrella companies are and what they mean for you.

What the changes mean

If your worker provides services to a public sector client, or a medium or large-sized client outside the public sector, they:

  • should get an employment status determination from the client, as well as the reasons behind that determination
  • will be able to dispute the determination given to them if they disagree with it

Different rules apply if your worker:

  • does not get an employment status determination from the client
  • provides services to small clients outside the public sector

If your worker does not get an employment status determination

This may be because they are providing services to a small-sized client outside the public sector, as the rules are not changing for these clients. Your worker can ask for confirmation of the client’s size and the client will have 45 days to respond.

If the client confirms it is a small-sized organisation, you as the intermediary (usually a limited company) will be responsible for determining your worker’s status to see if the off-payroll working rules apply.

Your responsibilities from 6 April 2021

Income Tax and National Insurance

If your worker provides services to a small client outside the public sector and the off-payroll working rules apply, you (the worker’s intermediary) will continue to be responsible for:

  • deciding the employment status of your worker
  • deducting Income Tax and National Insurance contributions from your worker’s fees and paying them to HMRC

Read more about the off-payroll working rules if your worker provides services to small clients outside the public sector.

If your worker provides services to a public sector client, or a medium or large-sized client outside the public sector, the deemed employer is responsible for:

  • deducting Income Tax and employee National Insurance contributions and paying them to HMRC
  • paying employer National Insurance contributions and Apprenticeship Levy, if the off-payroll working rules apply

Paying your worker

Your payment for your worker’s services will have already had Income Tax and National Insurance contributions deducted from them if both:

  • your worker provides services to a public authority or to a medium or large-sized client outside the public sector
  • the off-payroll working rules apply

This means when you pay your worker they do not need to pay Income Tax and National Insurance contributions again on those fees.

You can do this by either paying it as:

  • a salary through your payroll – but do not deduct Income Tax or National Insurance contributions
  • dividends – these do not need to be recorded on your worker’s Self Assessment return

As the amounts have already been treated as employment income doing it this way will avoid any double payment of Income Tax or National Insurance contributions.

What to do if your worker disagrees with the determination

The client must decide your worker’s employment status and if the off-payroll working rules apply. The client must then tell your worker their determination and the reasons for it.

If your worker disagrees, they’ll need to:

  • give details of the employment status determination they disagree with
  • give their reasons for disagreeing
  • keep copies of any records about disagreements

A disagreement can be raised until the last payment is made for the worker’s services.

The client will have 45 days from the date of receiving the worker’s disagreement to respond. During that time the deemed employer should continue to apply the rules in line with the client’s determination.

If the employment status determination has not changed, the client will have to tell your worker.

If the employment status determination has changed, the client will have to:

  • give a new status determination to your worker
  • confirm which date the determination is valid from
Published 22 August 2019
Last updated 29 April 2021 + show all updates
  1. Information has been added about working through an umbrella company.

  2. Information about a delay due to the coronavirus (COVID-19) pandemic removed.

  3. We have updated the page title to make clear that this guidance also applies to contractors.

  4. This page has been updated to reflect the delay to the changes to the off-payroll working rules until 6 April 2021.

  5. Information about what the April 2020 changes to the off-payroll working rules mean, your responsibilities from 6 April 2020 and what to do if your worker disagrees with the determination has been updated after the review of the off-payroll working rules from April 2020.

  6. First published.