Are you a Limited company working in the public sector?
From 6 April 2017:
- Workers providing their services via a PSC ( Personal Service Limited Company) to a public sector body may be treated for tax as if they are employees.
- The rules move the responsibility for deciding whether the off-payroll worker rules apply will move from the PSC to the public authority or agency who wishes to engage the personal services of the PSC’s worker.
- The public authority or agency will be responsible for deducting and paying over employment taxes and NICs where the rules apply and there is a ‘deemed direct payment’.
- The public authority or agency will also have to pay employer’s NIC on the deemed direct payment.
- The 5% flat rate deduction that applies to PSCs who are subject to IR35 will not be available when calculating the deemed direct payment.
- A PSC may still claim its expenses for corporation tax: however it may not have any income to offset against its costs.
- Tax relief for travel follows on from the changes made in 2015/16 whereby the 24 month rule will apply when travel, subsistence and related costs cannot be claimed where assignments exceed or are likely to exceed 24 months.
- These are big changes and we intend to brief face to face or by telephone any of our clients who are likely to be impacted. HMRC can immediately influence the public sector because they are all government departments. The big prize going forward is the consistent application of these rules to the private sector and so we need to watch this space.