Update on off-payroll working in the public sector

02 March 2017

HMRC has published further information on the scope of the reforms and preparing for 6 April 2017.

Draft legislation, an extensive technical note and updated guidance have also been published.



From 6 April 2017 there are changes to the way the current intermediaries legislation (known as IR35) is applied to off-payroll working in the public sector. Where the rules apply, people who work in the public sector through an intermediary will pay employment taxes in a similar way to employees. These changes will apply to:

  • public authorities who hire off-payroll contractors
  • public sector tax managers, payroll managers, human resources managers and procurement managers
  • agencies and third parties who supply contractors to the public sector
  • contractors who provide their services to a public authority through an intermediary.

The reform applies to payments made on or after 6 April 2017, including payments made for contracts entered into before that date. So where work is completed before 6 April 2017 but the payment is made on or after 6 April 2017, the new rules will still apply.


Scope of the reforms

HMRC has published information (Off-payroll working in the public sector: scope of the reform and preparing for 6 April 2017) to help public authorities, employment agencies and other third parties who supply labour to identify if the contracts they have are within the scope of the reform.

The information focusses on the types of contracts that need to be considered and gives further guidance on what is out of scope. It should also help understand what HMRC mean when they say a contract is a whole service contracted out to the public sector.


Draft legislation

At Autumn Statement 2016 the government confirmed that it will reform the intermediaries legislation in Chapter 8 Part 2 Income Taxes (Earnings and Pensions) Act 2003 (“ITEPA 2003”) often known as IR35. Draft legislation has been published for Finance Bill 2017 that introduces a new Chapter 10 Part 2 ITEPA 2003. A tax information and impact note has also been published.

The measure is subject to Parliamentary approval and Royal Assent.


Guidance updated

HMRC guidance about the reforms has also been updated to include further information for public authorities. More information will be published on this page before the changes are introduced.


CIPP comment

The new Employment Status Service which replaces the existing Employment Status Indicator tool. Has now been launched. Please let the CIPP Policy team know about your comments and experiences on this tool by emailing [email protected].