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Guidance on Off Payroll Working in the Public Sector

From April 2017, Contractors working on Public sector contracts are no longer responsible for determining their own IR35 status. The Public sector engager/end client now has to determine the IR35 status of a particular contract.

If the contract is assessed to be inside IR35, the entity which pays the contractor’s limited company (most likely to be either the public sector body or a recruitment agency) becomes responsible for deducting the resulting tax from payments made to the limited company and reporting these deductions through their own RTI processes.

The “deemed salary” calculation to be applied no longer gives a 5% allowance for company running costs for Public sector workers.

If you are working on an assignment for a public sector client, and your end client believes that you are caught by IR35, they will PAYE tax from payments made to your company. This doesn’t mean that you are no longer able to contract through a limited company but your take home pay may be affected if your public sector client or agency believes you are working on an assignment caught by IR35, and many contractors will take home more money through umbrella employment.  

Contractors working in the private sector will not see any changes to the current IR35 regime. To find out more about the changes please call us on 01296 468 185 or email accountancy@og7.lndo.site 

You might also want to read:

IR35 in the Public Sector 2017 changes

Attempting to Influence Public Sector IR35 Decisions

The implications of an inside IR35 status

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