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Reversal of IR35 laws will ‘unlock potential’ of contractors

Last week, Chancellor Kwasi Kwarteng, announced the repeal of the 2017 (public sector) and 2021 (private sector) IR35 reforms.

From April 2023, the responsibility for deciding employment status will return to contractors. This will mean that the end business user will no longer be liable for Tax or National Insurance contributions if the employment status adopted is deemed to be incorrect.

For businesses engaging contractors, these changes will remove the burden of determining the employment status for tax purposes of a contractor, making it easier to engage with highly skilled individuals. They will also save businesses the administrative time and costs associated with status determinations.

However, businesses could still be exposed to criminal liability if they pay contractors off-payroll when, in fact, they are aware that the contractors should be taxed as employees. Therefore, it’s important to note that the existing rules, which have been in place since April 2000, will still apply.

From now until April 2023, end businesses must remain compliant by continuing to administrate the current off-payroll working rules.

For further information about how this could affect your business, please contact

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