Have you found this content useful? Use the button above to save it to your profile.
The construction industry has been applauded by the government for continuing to work through the Covid-19 crisis. But this has meant making enormous changes to the way we work, including introducing agile working practices, as well as having employees on furlough and working when our work partners were not.
Now we need to up-end our systems again to cope with off-payroll working.
Long time coming
The off-payroll working rules (a variant of IR35) were originally introduced in the public sector in April 2017. Since that time the rules have been tightened and changed. The roll-out of these rules to the private sector, although due to be implemented in April 2020, was delayed until 6 April 2021.
The off-payroll working rules will apply to all large and medium sized engaging companies in the private sector, not just in the construction industry. Small engagers are not affected (see off-payroll working rules guidance).
Where the off-payroll rules bite they recharacterise payments made to an intermediary in respect of the services provided by an individual as employment income, where those services could be shown to be akin to those provided by an employee.
The key difference with the current implementation of IR35, is that it will be the responsibility of the “end user” to identify which services are caught by the off-payroll rules, and ensure that payment for those services is taxed under PAYE.
Construction chains
The complexity for a construction business is that it may use many tiers of sub-contractors in order to complete a project.
Register for free to continue reading
It’s 100% free and provides unlimited access to the latest accounting news, advice and insight every day. As well as access to this exclusive article, you can:
it's bizarre how doggedly HMRCy is flogging this, via complex rules, instead of the simple solution. Yet again policy determined by civil servants who scarcely know what a building site looks like, let alone how its mechanics work. They think that Wimpey build offices - doh.
you don't need the worker to give you either a tax code or their NINO. They complete a starter checklist (like an actual employee) and in the absence of that being completed they are allocated tax code 0T/1 (as any actual employee). The engager decides the NI label letter as usual and a NINO is not required at all to set up a payroll record just name, forename, DOB and 2 lines of the address - these are the key details that need obtaining.