NOTE: Reforms to off-payroll working rules have been delayed until April 2021 as part of the government’s Covid-19 economic response package.

The government has reaffirmed plans to make changes to off payroll working (IR35) rules effective from 6th April 2021. 

This will affect any contractors working through a Personal Service Company, Recruitment Agencies, and all Large and Medium-sized end clients.

HMRC Guidance:

Marking employee as an off payroll worker:

  • An employee cannot be changed from an off payroll worker to a worker or vice versa, If an existing employee becomes an off payroll worker it is a new employment.  
  • If an employee has been paid, off payroll worker is disabled.

Differences between off payroll worker and standard employees:

  • Off-payroll workers cannot repay student or postgraduate loan through payroll.
  • Auto Enrolment does not apply to off payroll workers.
  • Off payroll workers employers NI does not count towards employment allowance.
  • Off payroll workers are included in the apprentice levy calculation.
  • Off payroll workers do not receive statutory pay.

How to set up a off payroll worker

The off payroll worker option is on the 'General' tab of the 'Type of Worker' section.

Enabling 'off payroll worker' will do the following.

  • Disable AE controls and set "Exclude from Auto Enrolment".
  • Disable and unset "Holiday Credits".
  • Disable and unset "CIS subcontractor".
  • Disable and unset "Post Graduate Loan" and "Student Loan".
  • Indicate in the FPS submissions that the employee is an off payroll worker.

Open and Pay

When an employee is marked as an off payroll worker, in "Open and Pay > Change" they will have reduced absence recording options, the "Student Loans" and "AE Pension" options are disabled.

Importing and exporting

Off payroll worker can be set via importing, validation has been added to the imports to prevent invalid options being imported for off payroll workers.

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