IR35 changes are being scrapped again. Today, Chancellor Jeremy Hunt’s emergency statement cancelled the IR35 changes proposed in ‘mini-budget’ by previous Chancellor Kwarteng. Confused? Do you need to be concerned about it? Here is a short summary:
Newly appointed Chancellor Jeremy Hunt’s today announced that the IR35 reforms would be going ahead. The Chancellor said, “We will no longer be proceeding with the reversal of off-payroll working reforms (IR35) introduced in 2017 and 2021.”
The announcement comes less than a month after Kwarteng delivered the mini-budget speech where he said, “In practice, reforms to off-payroll working have added unnecessary complexity and cost for many businesses. So, as promised by My RHF the Prime Minister, we will repeal the 2017 and 2021 reforms. Of course, we will continue to keep compliance closely under review.”
Are the IR35 rules being scrapped?
Previous Chancellor Kwarteng’s plan was to give the responsibility to workers to determine their employment status, instead of businesses or public authorities to. According to the new Chancellor, Hunt, the IR35 rules will now remain in place with workers not determining their own status.
What is IR35 and does it apply to you?
IR35 was introduced in April 2000 as a new piece of tax legislation. You might be wondering why… Well, the government found that there were many contractors working for companies as contractors but they were actually employees. They were not being taxed as an employee but they were receiving all the benefits of being an employee (ie. holiday pay). The whole idea of IR35 is to stop contractors from avoiding tax.
Read more: Understanding Off-Payroll
This affects workers who have set up themselves as a private company, including building contractors and many others would usually work for other companies and are not on their payrolls.
Who is affected by the IR35 rules?
- A worker who provides their services through their intermediary (usually their own company)
- A client who receives services from a worker through their intermediary
- An agency providing workers’ services through their intermediary
Additional useful information
What is the Construction Industry Scheme (CIS)?
What happens if you don't pay CIS?
What is the Construction Industry Scheme (CIS)?
Construction Industry Scheme (CIS) FAQs
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