We’ve been back and forth, and upside down, with all the changes relating to IR35 in recent years.
IR35 is the off-payroll working rules, and applies to self-employed contractors providing services through a limited company. The rules are in place to ensure that contractors pay the correct amount of tax (and aren’t merely ‘disguised employees’).
Originally, the IR35 rules were for the public sector only. In 2017, they were extended to the private sector.
The IR35 rules put the burden on the contractor to determine contractor status (whether they were inside or outside IR35). The rules were changed in 2021, and the burden now sits with the client.
It has just been announced that there is going to be another review of IR35 rules. The chancellor has announced that the 2017 and 2021 reforms will all be repealed from 6 April 2023.
This means, assuming these changes do go ahead, that from 6 April next year, contractors are now responsible for determining their own employment status. And IR35 will no longer apply to the private sector.
While this sounds like some great de-regulation, please bear in mind three things:
1. It’s not confirmed yet
2. You still have to comply with criminal rules on facilitation of tax evasion
3. This doesn’t do away with previous IR35 infringements that might have occurred before the rules changed
We’ll keep you updated on IR35 changes as they arise – watch this space!