Changes to IR35: take action now!

Mini-budget: Changes to IR35 - How does this affect you?

UK Chancellor Kwasi Kwarteng announced his mini-budget on Friday 19th September, introducing many new measures to the economy and our lives to tackle the cost of living crisis and soaring inflation.

As well as the main talking points, the Chancellor announced that the reforms to the off-payroll working rules, known as IR35, are to be scrapped from April 2023.

This will mean that from 6th April 2023, contractors working for an organisation via an intermediary, such as a personal service company (PSC) will once again be responsible for determining their employment status and paying the appropriate amount of tax and national insurance contributions (NICs).

How could this affect you?

Companies who are ‘end-user’ clients in the contractor relationship are likely to welcome this change which is designed to reduce administrative burden on companies (e.g. from April 2023 they no longer need to carry out status determinations).?

This news may be good news from a tax risk perspective. However, more importantly it also means that the tax and NIC liabilities will once again sit with the PSC rather than the end client, which may lead to an increased use of contracting with and via PSCs.

Based on our previous experience, engagement strategy and status remains an area of complexity. These changes could result in a movement of candidates within the market from permanent to temporary contracts. This could potentially cause more volatility, particularly with drivers moving from job to job.

In turn this could drive an increase in pay rates to compete with other companies, with a risk of reduced headcount due to better rates elsewhere, and a possibility that you will lose your USPs to recruit new candidates.

There are a few ways in which we can support you ‘NOW’ leading up to the changes that come into effect in the spring of next year, which will mean you can engage this pool of workers now and costs will be kept flat, enabling you to make savings with immediate effect.

Message Danny Hobbs or email [email protected] to find out more.