HMRC states that Off-Payroll working rules make sure that a worker (sometimes known as a contractor) pays broadly the same Income Tax and National Insurance as an employee would. The rules apply if the worker who provides services to a client through their own intermediary would have been an employee if they were providing their services directly to that client. The rules are sometimes known as ‘IR35'.
A worker affected by the rules may provide their services through:
- a limited company, usually known as a personal service company (PSC)
- a partnership
- another individual
A PSC is not defined in law but typically is a limited company that a worker controls and has some interest in, through which the worker provides their services.
The off-payroll working rules apply on a contract-by-contract basis. A worker may have some contracts which are within the off-payroll working rules and some which are not. A contract for the purpose of the off-payroll working rules is a written, verbal, or implied agreement between parties.