What is the future of IR35?

In the Chancellor’s recent and radical ‘mini-Budget’, he announced that reforms to off-payroll legislation (IR35) are to be repealed as he believed IR35 was holding business back …

The one thing repealing the IR35 legislation will do is free up time and money for businesses that engage contractors! IR35 became law in the public sector in 2017 and in the private sector in 2021. This off-payroll legislation will no longer apply from April 2023, and contractors will then be responsible for their own tax.

Contractors will be celebrating and many businesses probably are too. The new Prime Minister Liz Truss has kept her promise to repeal the reforms. In her view, they had a damaging effect on both businesses and contractors over the past five years and they needed to go.

There were a number of structural deficiencies to IR35, which came into force in April 2000, and many believe it was flawed from the start. Industry observers felt the reforms in 2017 and 2021 became a form of glue that prevented growth in the economy and applaud the Government for its decision.

The one thing repealing the reforms will do is free up time and money for businesses that engage contractors, which can now be put towards other priorities. It will also minimise the risk that genuinely self-employed workers are negatively impacted by it.

It is unclear what position HMRC will take when dealing with businesses who have inadvertently fallen foul of the IR35 rules between now and April 2023.

Roger Eddowes
The Business Bulletin

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Roger Eddowes

Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts & Tax with Helen Beaumont in 2014. Roger loves ‘getting his hands dirty’, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Using an extensive network of business contacts to leverage the best guidance and practical solutions, he has been called a Business Godparent due to his caring, hands-on approach.

What is the future of IR35?

by Roger Eddowes Time to read: 1 min