The UK government’s “Growth Plan” (or “mini-budget”), delivered on 23 September, announced that the recent changes to the United Kingdom’s off-payroll working rules will be repealed with effect from April 2023.
This will remove a significant compliance burden for public sector bodies and certain private businesses which currently must determine whether individuals who provide services personally through intermediaries (such as personal service companies) are—if the presence of the intermediary is ignored—in substance employees.
The current rules impose a significant compliance burden on affected bodies and businesses. This includes the requirement to provide employment “status determination statements” supporting by reasoning—which can be an onerous requirement, given the complexity of determining the correct employment status of workers. If applicable, the rules also require the operation of pay-as-you-earn (PAYE) withholding to ensure that the correct amount of income tax and national insurance contributions (NICs) is paid.
The proposed changes will remove the requirement for public sector bodies and private businesses to determine whether the rules apply, reverting to the pre-2017 position where it is the intermediary which is responsible for application of the rules and accounting for any income tax and NICs under PAYE. This should result in a significant simplification of payroll compliance obligations in the labour supply chain for affected bodies and businesses.
If you would like to discuss the contents of this LawFlash or the impact of the off-payroll working rules on your organisation, please contact any of the authors or your usual Morgan Lewis contact.