The changes to the off payroll working (IR35) rules that were postponed from April 2020 are now due to come into effect from 6 April 2021.
The changes involve a major shift of the responsibility for tax compliance from workers’ personal service companies on to their end-user clients.
It will require larger private sector businesses – including some charities – to deduct income tax and National Insurance contributions via payroll from fees for services paid to a personal service company in specified circumstances.
This is a change from the current position, under which the tax liability rests with the personal service company. The change will be accompanied by obligations on the client company to determine the correct position for each engagement and notify the other parties involved.
Small companies, as per the Companies Act 2006 definition, will be exempt, so many charities will be unaffected by the change. Larger charities, however, that are involved in such arrangements with personal service companies should be aware of their new responsibilities following the change to the rules.
For more information and key steps to take if your charity is affected by the change, read our article.