Loathed IR35 reforms scrapped by Chancellor

Grant Prior 2 years ago
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Controversial reforms to the tax status of self-employed workers will be scrapped next year.

Changes to the IR35 system were introduced in April 2021 making contractors responsible for determining the employment status of freelance workers.

The move was roundly criticised by former self-employed workers who saw their tax bills rise and contractors who faced bigger bills from direct employment.

From April 2023 the system will revert back to its original rules with freelance workers assessing their own tax.

Hudson Contract managing director Ian Anfield said: “It’s great news that IR35 is being rolled back, but there are other terrible pieces of recent legislation which have done far more damage to construction, such as the VAT reverse charge and the end of the red diesel rebate, that should have been further up the government’s hit list.

“The use of limited company status is not huge in construction so whilst IR35 caused some issues within the technical professions like estimating, planning, project management and surveying, the vast majority of trades are sole-traders caught by different legislation.

“The big question will be what happens between now and April 2023 – it would be perverse for HMRC to go clobbering firms under IR35 just before the paper it is written on hits the dustbin.

“If Liz Truss and her team really wanted to help construction, they would have reversed the ending of the red diesel rebate that piled huge direct and indirect cost inflation on building firms and material manufacturers, and they would have revoked the VAT reverse charge which has crippled the cash flow of thousands of well-run profitable construction firms forcing a number of them into administration.

“Overall, it’s a good mini budget for Hudson, our clients, operatives and the industry. The stamp duty changes will help the house builders, which in turn will help keep demand up for skilled trades, and we are also glad to see a reduction in national insurance costs because we pay thousands of people under PAYE every year.”

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