Skip to content
logo Knowledgebase

Off-payroll working rules - IR35

Created on  | Last modified on 


IR35 - Off-Payroll working rules in Sage Payroll.


When a worker provides their services through an intermediary (often referred to as a Personal Service Company (PSC)) but works like a regular employee, off-payroll working rules make sure the worker pays the right amount of tax.


Who applies off-payroll working rules and how they're applied is changing.

To support you with legislation changes, HMRC offer businesses help to stay compliant.

Their policy paper is available here: HMRC IR35 Support (opens in new tab)

We've also made a video detailing the IR35 changes, you can watch the video from our YouTube channel.

Off-payroll working rules

Off-payroll working rules changed on 6 April 2021. The legislation HMRC made available is accessible from the HMRC website. Read Off-payroll working for clients (opens in a new window).

Workers providing services via their own PSC to a client who is:

In the public sector or a medium or large-sized private sector company

The client decides the worker's employment status and gives reasons for their decision.

The worker can dispute the determination given to them if they disagree with it.

A small company in the private sector

The worker's PSC will continue to be responsible for the workers employment status.

To qualify as a small organisation:

A small company (subject to the Companies Act 2006) must meet two of the following criteria:

  • Fewer than 50 employees
  • Annual turnover of less than £10.2m
  • Total balance sheet assets of less than £5.1m

Read more about the off-payroll working rules for clients (opens in new tab).

The client will assess the worker as a ‘deemed employee’ for a particular engagement. The worker gets added to the payroll of the ‘Fee-payer’. The Fee-payer is the party who pays the workers PSC. It is often the client but may also be another party, such as an agency if the client doesn’t pay the workers PSC. 

Information about the responsibilities of the fee-payer is on the HMRC website. Read Deemed employer responsibilities under off-payroll working rules (opens in new tab).


This article provides general rather than specific guidance to assist all of our customers. We always do our best to make sure that the information is correct but as it's general guidance, no guarantees can be made concerning its suitability for your particular needs. The information is valid at the time of publishing and is provided without any warranty of any kind, express or implied. You should take professional advice if you require specific guidance on your individual circumstances, for example to ensure that the results obtained from using our software comply with statutory or regulatory requirements. For Employers, PAYE, NIC and general tax enquiries you should call the HMRC helpline on 0300 200 3200 or visit their website at no event will we be liable to you for any direct, indirect, consequential or incidental loss or damage arising out of or in connection with your use of the information provided.

Related Solutions