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Following Friday’s Minibudget

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According to Friday’s mini budget, the IR35 reforms of 2017 and 2021 will be repealed. 

Chancellor Kwasi Kwarteng, said on Friday (23rd September), from April, workers across the UK providing their services via an intermediary, such as a personal service company, will once again be responsible for determining their employment status and paying the appropriate amount of tax and NICs. 

Kwarteng’s mini-budget statement also proposed to scrap the additional rate of income tax and cut its basic rate to 19 per cent in a series of tax cuts which amount to £45bn. 

But it was the IR35 repeal that has been celebrated by businesses and intermediary workers alike. 

Karteng said, “Reforms to off payroll working have added unnecessary complexity and cost for many businesses.” 

Seb Maley, CEO of IR35 Specialist Consultancy firm, Qods, also celebrated the repeal as he says, “Repealing IR35 reform is a huge victory for contractors. The changes have created havoc for hundreds of thousands of independent workers, along with the businesses that engage them.”

Why is this such a victory? 

Essentially this should help to simplify the tax process for businesses, saving them time, money and resources that can be put to use on other things. And it will give intermediary workers greater freedom; it reinstates their control and responsibility of determining the tax status of their own assignments. 

Sid Agarwal of contractor accountancy firm DNS Associates said in a statement to Contractor UK, “Contractors who have faced nothing but disappointment in the last five years, with exclusion from Covid-19 support packages and the harsh IR35 reforms, have finally something to cheer about.”

However, many have highlighted that with the repeal coming into effect from April 6th, 2023, contractors working on 3–6-month assignments will need to carefully consider how to transition their contracts and arrangement to ensure they can take full control come the new tax year.

Although many celebrated the repeal there were also many words of warning for the government, Maley said, “The last thing contractors and businesses impacted by IR35 need is uncertainty. A clear and robust roadmap for reversing IR35 reform in both the public and private sectors is needed.”

We will, of course, keep you updated as further plans are released. 

Until now, a long line of Treasury ministers, backed by HMRC, have said the IR35 changes of 2017/2021 do not affect the genuinely self-employed, totally at odds with evidence that some organisations have outright banned all limited company workers. But on Friday, in a rare acknowledgement from HMT, its new boss said his reform would ‘minimise’ the “risk” that genuinely self-employed workers get “impacted” by the off-payroll rules.

If you have any questions regarding the IR35 repeal, what it might mean for you or your business, or are looking for a new intermediary role please contact joe@caminosearch.co.uk or samuel@caminosearch.co.uk