Government repeals unfair 2017 and 2021 changes to both public and private sector IR35 legislation from April 2023

Chancellor Kwasi Kwarteng used the recent mini-Budget to repeal IR35 legislation in the public and private sectors, stunning and delighting contractors.

Mr Kwarteng said IR35 reform had imposed “unnecessary cost and complexity” for “many businesses,” so it will be repealed, “as promised by…the Prime Minister.”

In fact, Liz Truss only promised the Off-Payroll rules would be reviewed, but that’s not stopping the contractor sector from celebrating that all IR35 status decisions will be reverting to them from 6th April 2023.

The Chancellor was clear when he said “From this date, workers providing their services via an intermediary will once again be responsible for determining their employment status and they will be responsible for paying the appropriate tax and National Insurance contributions. This will free up time and money for businesses who engage contractors that could be put towards other priorities.”

Until now, a long line of Treasury ministers, backed by HMRC have, contrary to the evidence, said that the IR35 changes of 2017/2021 do not affect genuine contractors – conveniently ignoring the fact some organisations made a blanket determination and banned all limited company workers.

Along with a planned increase in Corporation Tax from 2023 being cancelled, this is great news for contractors and we expect to see clients who were forced to work PAYE or through an Umbrella Company, resulting in a large drop in net income, once again working through their limited company.

You don’t however have to wait until April 2023 to increase your take-home pay if you are currently working ‘inside IR35’ through PAYE or Umbrella. You can do so now by finding and moving to a new ‘outside IR35’ contract working through your own limited company.

As always, we are here to help and advise you.