Off-Payroll Working in 2022: the rules and what it means

8 December 2022 by Robin - 7 minutes of reading time

off payroll working

What is off-payroll working? What are the rules? Who do the rules apply to? You may have a certain employment status. In fact, you may be a worker, working via your own company or intermediary, and providing a certain service to clients. Then, you could be affected by certain rules. Your Benefits will tell you everything you need to know about off-payroll working, and the rules associated with it.

What is off-payroll working?

Off-payroll working is when workers provide a certain service to certain clients via their own company or intermediary. They would typically be considered an employee if contracted directly. 

What does off-payroll payment mean? This is a set of rules. In fact, they dictate the Income Tax and National Insurance contributions. In fact, certain people may work within their own limited companies. Furthermore, they are treated as employees. Furthermore, the off-payroll rules changed on 6 April 2021. 

Then, the off-payroll working rules are designed to affect these people. More specifically, this is to make sure that these people pay roughly the same amount of National Insurance contributions and Income Tax. This is compared to people who are direct employees.

You could be affected by the off-payroll payment rules. In fact, this is the case if you are considered a worker. You can also be called a contractor. Furthermore, you need to, through your own limited company (or another type of intermediary), provide certain services to a client. 

An ‘intermediary’ could be a number of things. First, it could be the personal service company of the worker. Otherwise, it could be an individual or partnership.

The off-payroll working name is not the only name under which this set of rules is known. In fact, this is also known as ‘IR35’. You may also wonder what ‘client’ refers to. The client is whoever is the recipient of the services. Additionally, they may be known under a different name, like the end client, hirer, or engager.

What are the off-payroll working rules?

What are the off-payroll working rules?

There were different rules when it comes to off-payroll working. In fact, the rules changed on certain dates. Starting from 6 April 2017, the group responsible for choosing the rules became public authorities. In fact, they ruled that the rules apply to contracted workers who give services through their company or intermediary.

Then, on 6 April 2021, the rules changed again. Then, those who decide whether the rules apply or not are large and medium-sized clients that are not in the public sector, and public authorities.

Following 6 April 2021, a worker may give services to a client not in the public sector, and of a small size. Then, the intermediary of the worker is responsible to determine if the rules apply, as well as the employment status of the worker.

Furthermore, it could be that you come across a scheme that claims to be able to bypass the off-payroll working rules. Then, this claim is likely false.

You may be affected by the off-payroll working rules. However, you could also be eligible for benefits that you are not claiming. Then, Your Benefits can help. We provide articles on a multitude of financial aid. 

Furthermore, we provide a free simulator which can show you all the benefits you are eligible for. In fact, you could be able to claim some financial aid that you are not getting. Our free service will let you see if that is indeed the case. And again, it’s completely free.

Who do the rules apply to?

There are three different types of people that off-payroll working applies to. They are as follows:

  • An agency worker: this is the case if the worker offers their service via their intermediary;
  • A client: who gets a service done by a worker via their own intermediary;
  • Any other type of worker who give certain services via their intermediary.

If you are one of the following, then the rules would likely apply to you. Then, you will need to pay National Insurance contributions and Income Tax. More specifically, they will take these out of your fees. Then, these payments will be given to Her Majesty’s Revenue and Customs (HMRC). 

Additional things may need to be paid. In fact, this may be the Apprenticeship Levy or employer National Insurance contributions. Then, payments have to be made to Her Majesty’s Revenue and Customs (HMRC). These need to be paid by the individual that pays the intermediary of the worker.

The Income Tax that workers need to pay is typically the same as anyone else. In fact, the Income Tax in 2022 is as follows for different tax bands:

Income Tax rates for the 2022 to 2023 tax year per tax band
Tax rate Tax band Amount of income
0% Personal Allowance Maximum of £12,570
20% Basic rate Between £12,571 and £50,270
40% Higher rate Between £50,271 and £150,000
45% Additional rate More than £150,000

When do the off-payroll working rules apply?

When do the off-payroll working rules apply?

You may be a worker that gives services to clients via your own intermediary. Furthermore, it could be that, if you were contacted directly, you would be considered an employee

When there are off-payroll working rules, this is determined in the form of a contract. This may be written, but it does not need to be. In fact, the contract may have been verbal. This means that the rules that were determined were done so out loud. Finally, the contract for the rules could have simply been implied.

You may have rules that apply to you. If this is the case, the rules apply from contract to contract. What this means is that not all the contracts that you take may fall within the off-payroll working rules. Some may, while some may not.

Additionally, you could be eligible for certain benefits. Otherwise, you may need information on things such as your employment status. Then, Your Benefits can help. In fact, we provide a number of articles about concepts and benefits that may apply to you. A lot are linked throughout, or accessible through the top menu.

Furthermore, you could be missing out on benefits you are entitled to. Then, Your Benefits can help (again). More specifically, we also provide a free simulator that can show you all the benefits that you could receive. And again, this service is completely free. Do not hesitate to put it to good use.

What are the rules for agencies?

There are certain rules that apply if you are an agency worker. In fact, you might be in an agency. The agency may also be considered as an employer. Additionally, this is true if the agency or a certain person is paying the intermediary of the worker. 

Typically, the employer will have to be the one to subtract employee National Insurance contributions and Income Tax from the pay of the worker. Then, these need to be paid to HMRC. Additionally, if it applies, the employer also has to pay Apprenticeship Levy and employer National Insurance contributions.

However, the agency may not be determined as an employer. If this is the case, Income Tax and National Insurance contributions do not need to be taken out of the pay of the worker. 

What else do I need to know?

You may be deemed employment, employment status for tax, get a status determination statement (medium or large), be employed or self employed. You may have a personal service company (psc), contractors who work in the private sector.

To know if the ir35 rules apply to you, you can check your tax avoidance and check your employment status.

Robin is a writer for Your Benefits, writing about aids that people may be entitled to. He is currently working on his Master in journalism at the Institut Supérieur de Formation au Journalisme in Lille.

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