Is your organisation affected by the new changes?
There are two types of organisation affected by the new rules:
1. Public authorities
A public authority is any entity that is defined as such under the Freedom of Information Act 2000. This includes various bodies connected with local government, the NHS, education services and the police.
Public authorities (whether large, medium or small entities) are already required (since 2017) to operate payroll for any workers caught by the IR35 rules, but from April 2021 they must comply with a new process as relayed later in this article.
Following the latest government guidelines, from 11 May 2020, public authorities will also be required to start using the new PAYE RTI 'off-payroll worker subject to the rules' indicator in payrolling software.
2. Other large and medium size entities
The change in rules will affect you if you’re a medium or large organisation. Your entity falls within those categories if any two of the following apply:
• Your annual turnover (excluding donations and voluntary income) is more than £10.2m
• Your balance sheet total is more than £5.1m
• Your average number of your employees is more than 50
An unincorporated entity (such as a charitable trust) is medium or large if its annual turnover (excluding donations and voluntary income) exceeds £10.2 million.
If your organisation doesn’t meet this criteria, the responsibility for IR35 remains with the PSC.
Employment status under new off-payroll working rules is determined by a wide range of factors such as control, substitution, integration and financial risk. There’s often not a clear answer to whether a worker falls within the new off-payroll working rules. A useful starting point would be to use HMRC’s online Check Employment Status for Tax (CEST) tool, in preparation for the new rules. However, this tool is not definitive, and you may need to seek further professional advice if you have queries about specific contracts.