Off-payroll working rules (IR35) from April 2021 within the Construction sector

Category: Property & Construction - Posted On: Mar 10 2021

With the off-payroll working rules (IR35) changes coming into effect from April 2021, those working in the construction sector should use this time to properly prepare for how these changes will impact their workforce and their business.

Under the legislation, large and medium companies will need to assess if contractors providing services through personal service companies (PSCs) are employees if they were engaged directly. Where this is case, the fee payer of the services will have to deduct PAYE tax and National Insurance (NI) on the payments made to the PSCs. In addition, the fee payer will have to pay additional Employers National Insurance at 13.8%.

The rules will apply if the company engages with the PSC directly or via an intermediary such as an agency. Small companies will be exempt, although determining what is meant by ‘small’ will not always be easy, particularly when groups are involved.

Construction companies should already be aware of IR35, but with less than 4 weeks to go, it is important that they utilise this time to fully prepare if they haven’t already. From 6 April 2021, companies will need to :-

  • Identify PSCs within their supply chain
  • Make the required status determination of the worker and provide a Status Determination Statement (SDS) to both the fee payer and the worker
  • If the SDS deems the worker as an employee, then changes are needed to working practices and procedures to ensure that PAYE tax and NI is deducted via the payroll
  • Engagers must put an appeal process in place to allow the worker the right of appeal
  • A review of contracts with PSCs impacted by the rules will be required
  • A review of the financial impacts of the rules will need to be undertaken to assess their impact on contracts

Our EQ Property & Construction team can provide support to identify the steps and decisions which will need to be taken to effectively manage the IR35 changes. If you’d like to find out more information, or need advice regarding your employment status, please email our EQ Property & Construction team at or contact one of our offices.