The off-payroll set-off (or offset) is a statutory rule, in force from 6 April 2024, that prevents the double taxation that used to arise when HMRC found a client or fee-payer had wrongly treated an engagement as outside IR35.
Before April 2024, HMRC assessed the full PAYE and NIC on the deemed employer without any credit for the tax the worker and PSC had already paid on the same income (corporation tax on PSC profits, income tax and employee NIC on salary, and income tax on dividends). The same income was effectively taxed twice. From 6 April 2024, the set-off lets HMRC reduce the deemed employer's PAYE liability by an estimate of those taxes already paid.
Two points are important. First, the offset reduces but does not eliminate the deemed employer's exposure: it credits worker and PSC taxes already paid, but not the employer NIC, which was never paid in the first place. Second, it is an HMRC-operated estimate on a trigger event (typically a Reg 80 determination), not an automatic netting the contractor or client can rely on. It applies to errors arising from 6 April 2017 (public sector) or 6 April 2021 (private sector), with the offset itself available from 6 April 2024.