What could the IR35 repeal mean for contractors?
The IR35 Budget Announcement
Mind blown, is an understatement. A massive win for contractors in today’s mini budget by chancellor Kwasi Kwarteng announcing the repeal of the off-payroll working rules introduced in 2017 and 2021 from April 2023.
With repeal as it stands this would mean the IR35 responsibility is shifted back to the contract, instead of the responsibility lying with the medium to large organisations.
With so many contractors being negatively impacted in both the public and private sectors from introducing these changes. Financially would not have been a worse time during the covid-19 pandemic. This is welcomed news for those caught up with the organisation that put a blanket ban on contractors.
This will mean contractors will be again responsible for their own IR35 determination. And so can utilize IR35 experts for a fair determination based on the contract and working practices of the role.
Comments from our partner Gorilla Accounting
“We strongly welcome the news around the repeal of the 2017 and 2021 IR35 changes. The changes hit the Contractor/Freelancer community hard. And many contractors exited the sector on the back of blanket assessments from end users. These changes will now give the market for Contractors a much-needed boost and demand for Contractors will surge. Anyone Contractors that were negatively affected by the changes will no doubt welcome these changes and be reviewing their options”
What will be the future of IR35?
What this will look like in the longer term, will be interesting.
The chancellor mentions there are things that could be done to make IR35 simpler, but could this mean IR35 gets scraped altogether and replaced with a new legislation.
This opens up some questions:
As what will happen to those assessed inside IR35 by their employer, and later get an assessment individually to be found outside IR35? Will this then mean they could be put at risk of investigation?
For those already assessed as Outside IR35 would the contractors need to do their own due diligence? Or will they be able to rely on the determinations made by the end hirer?
What happens to the thousands of contractors that closed their limited companies when moved into Inside IR35, Fixed Term Contracts and PAYE roles? Will they still have to wait 2 years from the distribution before returning to contracting?
We will be keeping an eye out for any further details on this and with the freeze on Corporation Tax at 19% and reversal of 1.25% dividend, it seems the sun is emerging on the contractor sector. But the devil will be in the detail.