With changes being outlined in the recent mini-budget, it’s now time again to look at IR35 and what you need to know.
Kwasi Kwarteng repealed the off-payroll working legislation, with these changes coming into effect from April 2023.
This came as a big shock! Most businesses and accountants expected Truss to announce she’d be reviewing the legislation rather than just scrapping it.
Contractors will yet again be responsible for analysing and reporting their IR35 status as of April 2023, as per the original legislation from 2000.
So, IR35 is here to stay?
In short, yes. IR35 will remain a vital part of the contractor and business world and be pivotal to get right to make your tax bill as efficient as possible.
The repeal, as outlined in the Government’s growth plan, represents a saving of six billion pounds – and whilst this may be good for the economy, complacency should still be very much advised against.
The off-payroll reforms were very unpopular – contractors, businesses and the economy as a whole are all very much against the legislation.
So now the reporting returns to as it was – there will be no extra requirements for you as business owners.
But things could always change.
Make sure you:
- Don’t ignore IR35 – more things could change in the future.
- Be aware that HMRC has much more data and tools to enforce tax avoidance and will continue to enforce IR35 from 2023.
- Stay up to date with the management service companies legislation – avoid “tax loss” insurance policies that cover repayment of taxes and penalties.
- Learn the original IR35 legislation.
- Complete your IR35 assessments and determine whether you’re operating ‘outside IR35’ and pay the correct tax.
- Stay informed and be prepared.
- Consult with an accountant if you’re unsure
What’s likely to happen next with IR35?
IR35 is very likely to change again in the future, especially after the recent repeal.
There’s another fiscal statement scheduled for October of this year, and knowing how this Government operates, it would be no surprise to see more changes.
The off-payroll scheme as it is now is still law, so please continue to adhere to the same ways of working. It’s not worth getting stung.
Experience tells us that delays can happen at the last minute, and for now, off-payroll is still binding law.
But talk to us as your adviser, and we can work together to assess and understand any changes and how they may affect you and your business.
If you would like help with your IR35, get in touch.