In a document issued following the Autumn statement, the Government confirmed that the reform is designed to tackle the “high levels of non-compliance with the current rules”, and follows the clampdown on off-payroll arrangements introduced following the HM Treasury report in 2012.The Government believes that this change could raise £555 million by the end of the 2020-21 tax year.

The move will affect NHS workers such as interim managers, locum doctors and agency staff who are engaged through personal service companies. Following its introduction, all payments made by public sector engagers to workers who provide their services through personal service companies will be treated as payments of employment income on which the engager (or the third party intermediary, if any) will be required to account for tax (including employer national insurance contributions).

Further guidance from HMRC as to how the new rules will operate in practice is awaited and, until then, the exact demands on public sector employers and their off-payroll workforce are unclear. What seems clear, however, is that from next April, employers in the NHS and across the public sector more generally are likely to face an increase in costs, both in terms of an increased national insurance bill and in compliance and administration costs.

For further information on how this issue might affect your organisation, please contact Martin Hamilton, Rachael Heenan or Jacqui Atkinson.