IR35 Repealed - What you need to know!
The recent mini budget has revealed that IR35 will be scrapped. This is music to the ears of contractors and the businesses that engage with them.
Here are the key facts you need to know:
The all-important date…6th April 2023
From April 6th the Treasury Growth Plan states that the 2017 and 2021 reforms to the off payroll working rules (also known as IR35) will be repealed. From this date, 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.
Seb Maley, CEO of IR35 Partner Qdos said: “This will come as a huge relief to contractors, in particular. It’s no secret that many genuinely self-employed contractors have struggled to secure projects outside IR35 since the roll-out of reform”.
“On the whole, it’s positive news for businesses, too – albeit tempered by the fact that they have invested significant resource in preparing for and managing their IR35 compliance in recent years. I should stress, though, that nothing will change until April 2023 – meaning that IR35 compliance must remain a priority”.
Does IR35 disappear just like that?
Although this is obviously great news for businesses and contractors, they should still be cautious.
IR35’s story isn’t over yet – the rules remain the same – it’s just that contractors will once more oversee compliance and tax payment. If businesses continue to pay contractors off-payroll despite knowing that they should be subject to employee taxation, they run the danger of violating additional tax laws and committing corporate criminal tax offences.
An increase demand for contractors
We witnessed significant reductions in contractor hiring in the financial services and governmental sector after the reforms were implemented.
Contractor hiring will grow, much like it did in 2018 during the credit crunch, as permanent hiring freezes are implemented, and the economy shrinks. It's crucial to make sure you have reliable partners and clear projects for contractors and freelancers to work on, rather than just using them as a cheap alternative to hiring full-time employees.
Why should you hire a contractor?
One benefit of hiring a contractor is it is cost-effective, you don’t have to pay for their holiday leave, sick days, pension plan, insurance, training, and other staff programs. Reports suggest that businesses can save between 20% - 30% when hiring a contractor, coupled with the fact that from April 2023, IR35 will be repealed, hiring a contractor will have a huge upside for business. Also, contractors are specialists in their field, meaning they can jump straight into the project at hand.
However, there is some downside to hiring contractors, such as them not buying in to the long-term business goal or the culture, nevertheless they are being hired to use their wealth of knowledge and focus on a sole project.
We’re here to assist you
If you’re struggling to hire permanent staff or want to know more on how contractors can benefit you, please get in touch we’re happy to help!
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