IR35 Update

On 23rd September 2022, during the ‘mini-budget ‘Kwasi Kwarteng, Chancellor of the Exchequer announced the taxation changes, ‘IR35’ imposed in 2021 would be repealed effective 6th April 2023, which essentially reverted back to the old rules; whereby contractors providing their services via an intermediary or personal service company ‘PSC’ would once again determine their own employment and taxation status and pay appropriate taxes and national insurance contributions.

The government, a mere 3 weeks later on 17th October 2022 has reversed its decision to repeal changes to IR35. This U-turn decision has caused mass outcry from businesses and contractors alike who welcomed the repeal as they reported that it left them uncompetitive and many contractors reported that the original implementation in 2021 saw them paying higher taxes with none of the benefits that a worker would receive such as holiday and sick pay.

It is therefore business as usual for companies, IR35 obligations for companies hiring contractors through intermediaries or PSCs will continue to be responsible for assessing contractors IR35 status and ensuring the correct PAYE and NICs are being paid.