Payroll reform in the pipeline

Philip Hammond

November 28, 2017 – Planned reform of tax rules for off-payroll workers is set to have a substantial impact on the construction industry, a firm of tax accountants is warning.

Chancellor Philip Hammond signalled in his autumn budget that new rules were being prepared for off-payroll workers in the private sector

Although there were no major changes in the budget itself around engaging off-payroll workers, two consultations signalled that change is coming. The government has indicated that it will look at off-payroll workers in the private sector and specifically those employees who are engaged via personal services companies.

Change has already been introduced in the public sector. Since April 2017 public sector employees cannot be employed through personal service companies.

Lee Hamilton, partner at tax accountant Blick Rothenberg, said: “Employers will want to follow developments closely in this area, especially those who engage a large number of self-employed workers.

“Having changed the rules with regard to the public sector from 6th April 2017 (with the reform of the IR35 rules), it is highly likely that there will be significant changes to the rules in the private sector in the pipeline. Any such changes will have a more significant impact on certain sectors such as entertainment and construction, where the use of off-payroll workers is prevalent.”

In addition, a discussion paper was also announced in response to the recent (Matthew) Taylor review of employment practices earlier this year. Specifically, the government will look at the whole question of employment status (i.e. whether someone should be considered an employee or self-employed). Again, changing current rules and practices in this area is likely to have a significant impact for employers.

Lee Hamilton said: “We are heartened by the fact that the government has decided not to legislate immediately with regard to off-payroll workers in the private sector (as was anticipated in some quarters) and that it recognises the complexity involved in any future changes. However, we would encourage employers to follow any consultations closely to allow time to prepare for future legislation which is likely in this area.”




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