HMRC have reminded employers as part of the July 2024 employer bulletin, the Real Time Information (RTI) setting required and some of the practical operation requirements as they relate to off-payroll workers.
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Operating payroll: Real Time Information for off-payroll working (IR35)
The off-payroll working rules have been in place for several years. The rules were introduced to ensure that individuals who work through an intermediary such as a Personal Service Company pay broadly the same Income Tax and National Insurance contributions as other employees working in a similar way.
Where an individual is engaged through an intermediary, the responsibility for determining whether the rules apply moved to public sector organisations from April 2017, and medium and large-sized organisations, from April 2021. Where the rules apply, the individual is classed as a deemed employee.
If you are the deemed employer, you should add the deemed employee to your existing payroll like any other starter, or if you prefer you can set up a new payroll specifically for deemed employees. A record should be kept of any payments, as well as the amounts of Income Tax and National Insurance contributions deducted, which must be reported to HMRC under Real Time Information (RTI) using a Full Payment Submission.
When running payroll, the RTI flag (sometimes referred to as the off-payroll worker marker) should be set to show the individual is an off-payroll worker. This ensures that the engagement is treated correctly for tax purposes and is reflective of the status determination, which will have been provided to the worker. It is important to use the RTI flag correctly because it helps to ensure that the final annual tax position for each individual is accurate, without the need for any reconciliation.
Deemed employers must not make deductions for student or postgraduate loan repayments from payments made to their deemed employees. The deemed employees are responsible for making these loan repayments through their own income tax self-assessment tax returns after the end of the tax year.
There is more information on who is affected by the off-payroll working rules from April 2021.
Additional guidance about operating PAYE within the off-payroll working rules is available.
PAYadvice.UK 11/7/2024