Good News - Change proposed to off-payroll working rules for intermediaries

13 November 2020: Intermediaries which are not personal service companies such as umbrella companies and agencies, will be treated differently to personal services companies in the new off-payroll working regime.

It has been announced in a written ministerial statement from Jesse Norman, the Financial Secretary to the Treasury, that the new off-payroll working rules which come into effect on 6 April 2021 will be tweaked in Finance Bill 2021. The change will ensure that intermediaries that are companies are not treated in the same way as intermediaries that are personal service companies (PSC).

If left unchanged, then, where the other conditions of Chapter 10 are met, PAYE could have been required to be withheld from payments to a wider than intended range of companies providing a worker’s services to a third party. This would have included:

• umbrella companies;

• employers seconding employees; and

• agencies providing workers.

The amended conditions in s61O, ITEPA 2003 (added by FA 2020) were intended to prevent avoidance arrangements that seek to get around the material interest test. The wider consequences of this amendment were not the policy intention.