Controversial reforms governing the tax status of contractors are to be repealed next year as part of a wider strategy to spur economic growth, the chancellor announced today.
From 2017 public authorities were required to determine whether a contractor was, in effect, an employee who should be taxed by the employer. The rules, known as IR35, were extended to the private sector in 2021. Speaking as he unveiled sweeping cuts to personal and business taxation, Kwasi Kwarteng said: “We can also simplify the IR35 rules – and we will. In practice, reforms to off-payroll working have added unnecessary complexity and cost for many businesses.
“So, as promised by my Right Honourable Friend the Prime Minister, we will repeal the 2017 and 2021 reforms. Of course, we will continue to keep compliance closely under review.”
One NHS finance director said the rules would not be difficult to unpick but highlighted the “wasted effort and red tape we put into complying”.
The off-payroll working rules aimed to cut down on tax avoidance by requiring employers to assess whether workers providing services through an intermediary such as a limited company were effectively employees who should pay more tax. Guidance issued earlier this year warned of “substantial administrative implications” for NHS providers, who were told to “comply in full” with the regulations and assess the employment status of locum and agency staff.
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Source: HSJ
Date: 26 September