Loathed IR35 reforms return in latest tax U-turn

Grant Prior 2 years ago
Share

Chancellor Jeremy Hunt has reversed plans to scrap controversial reforms to the tax status of self-employed workers.

The volte face came as Hunt ripped-up virtually all of the tax measures announced in previous chancellor Kwasi Kwarteng’s “Growth Plan” last month.

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.

Kwarteng said from April 2023 the system would revert back to its original rules with freelance workers assessing their own tax.

But that has now been canned by Hunt who said: “We will no longer be proceeding with the reversal of off-payroll working reforms.”

Hunt added that he was “deeply committed” to cutting tax and letting people keep more of the money they earn before confirming in his “Un-Budget” that the following policies will no longer go-ahead:

    • Cutting the basic rate of income tax to 19% from April 2023. While the government aims to proceed with the cut in due course, this will only take place when economic conditions allow for it and a change is affordable. The basic rate of income tax will therefore remain at 20% indefinitely.
    • Cutting dividends tax by 1.25 percentage points from April 2023. The 1.25 percentage points increase, which took effect in April 2022, will now remain in place.
    • Repealing the 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) from April 2023. The reforms will now remain in place.
    • Introducing a new VAT-free shopping scheme for non-UK visitors to Great Britain.
    • Freezing alcohol duty rates from 1 February 2023 for a year.

Infrastructure investment and planning rule changes announced in the Growth Plan are currently still going ahead.

Ian Anfield, managing director of payroll provider Hudson Contract said: “Once the markets had reacted so badly to the mini-budget and the government started back pedalling, the changes to IR35 were always in peril.

“Thousands of professional consultants working in and around construction such as surveyors, planners and CAD technicians will be disappointed however, for the vast majority of construction firms, and to most of the two million plus people doing work for them, this will not mean too much.

“Despite lots of confusion around IR35, firms with turnovers less than £10.2m are not caught, and the vast majority of self-employed trade operatives are sole traders and therefore not caught either.

“The good news for construction is that the stamp duty reforms set to help the housing sector were already passing through legislation and are set to stay.

“And still desperately clinging to the growth agenda, the government say they will press ahead with planning reforms and the acceleration of infrastructure projects.”

 

 

Latest news

GRAHAM wins £100m deal after safety regulator approval

Dyecoats scheme in Leeds becomes one of first to receive Building Safety Act Gateway 2 green light
8 hours ago

Housing orders surge offers hope after 5.2% new work fall last year

Housing orders surged 24% in final quarter of 2024 as developers release schemes
11 hours ago

BAM Construction suffers £40m loss after Co-op Live setback

Civils business profit surges 24% to £80m
14 hours ago

Over 150 jobs axed as J S Wright goes under

Insolvency specialist FRP Advisory goes in at Birmingham M&E specialist
15 hours ago

Extra cash found to speed-up safety regulator

Government to spend extra £2m to clear backlog of high rise approvals
14 hours ago

Galliford Try lands £63m RAF accommodation deal

Work to start within months at RAF Digby in Lincolnshire
14 hours ago

Balfour Beatty wins Trent arched bridge job

Briton Fabricators will build the £13m bridge from prefabricated sections
14 hours ago

Goldbeck to build new £50m Cardiff County Hall

German-owned contractor vowing to be a "disrupter in the UK market"
23 hours ago

Laing O’Rourke chairman to step down

Ray O'Rourke to take over chair from Sir John Parker
1 day ago

Farrans lands Leeds Bradford Airport phase 2 upgrade

Contractor takes follow-on refurb job after terminal extension
1 day ago

ISG built Bristol housing block to be torn down

Contractor's collapse sinks Bristol flats remediation claim
2 days ago

RSK revenue nears £2bn as losses soar to £132m

Refinancing last summer puts group on course for more growth this year
2 days ago

Bridge design wind error adds £20m to construction costs

Completion of £148m Grantham Southern Relief Road delayed by a year
2 days ago

Rayner pledges extra £350m for social house building

More than 3,000 homes could be built with cash injection
2 days ago

City’s biggest retrofit tower scheme approved

Triple-fronted 70 Gracechurch Street building will rise to 33 storeys
2 days ago

Defibrillator saves worker’s life on Wates site

Machine operator saved after "dying" for 16 minutes on prison job
2 days ago

Funding deal for £125m Camden Roundhouse scheme

Developer Regal set to start 264-bed student scheme
3 days ago

Balfour leadership rejig to focus on three key growth sectors

Divisional CEO trio take lead roles for energy, defence and transport expansion
3 days ago

ABP bidders day for £150m Humber ports pipeline

Nine projects in the pipeline to support automotive and energy transition schemes
3 days ago

Hinkley Point C to create 3,000 jobs as work ramps up

Fitout surge to swell workforce to 15,000 in next 18 months
3 days ago

Hercules sells suction excavator division for £2.4m

Loss making arm sold by labour hire specialist
3 days ago

Foundations complete at HS2 Old Oak Common station

Station base completed using 76,000 cubic metres of concrete and 17,000 tonnes of reinforced steel
3 days ago

Bids invited for £175m consultancy framework

Fusion21 inviting consultants to join latest four-year deal
3 days ago

Regulator pledges to clear 122 project backlog by April

A third of applications failed to meet required standards says building safety regulator
4 days ago

Government opens bidding for new AI Growth Zones

Interest for sites in Scotland, Wales, the North East and North West
4 days ago

Vistry strikes deal for phase 3 of £1.2bn London estate rebuild

323-homes at giant Clapham Park scheme move to construction
4 days ago

Fire hits £31m student accommodation site

Blaze breaks out on Lancaster job where Bridgestone Construction is main contractor
5 days ago

Green light for £250m Salford data centre

Six acre plot to be transformed at Peel Waters site
4 days ago

Two in race for £269m HS2 people mover deal

Winner expected next year as hunt continues for infrastructure builder
4 days ago

M&E specialist J S Wright files administration notice

Employee-owned Midlands specialist was established 135 years ago
7 days ago

Contractor services