IR35 Update

By Laura Knowles

You may have heard recently that there have been some discussions in the news about the potential changes to the IR35 working rules.

To give you some background; IR35 are the off-payroll working rules which apply to contractors who provide their services through their own limited company.

Prior to 6 April 2021, contractors were entirely responsible for assessing if they were ‘self- employed’ for tax purposes. As the contractor was responsible for establishing their status, it meant there was some opportunity for financial gain because by considering themselves as not being an employee they avoided the PAYE system. The government was losing out on the tax and NI contributions because of this and so they established updated IR35 working rules.

The 2021 update to the IR35 rules moved the responsibility for the assessment of employment status on to the ‘employer’ or person receiving the service. Many businesses have found that this is an administrative burden and can be quite costly in terms of time. Because of this, it is no surprise to hear that many businesses were really pleased to hear that the Government were planning to return to previous ways of working whereby contractors hold the responsibility for determining their employment status and associated tax.

However, it has now been announced that the Government’s plan to simplify the IR35 rules from April 2023 has been abandoned, therefore employers must continue to perform the relevant checks to determine the status of off payroll workers they engage.

If you were one of the many businesses disappointed at the recent news, perhaps you are struggling to keep on top of the IR35 requirements, or perhaps this is something you need to start doing going forward and you need some support, please get in touch with us here at Second Chapter HR to see how we can help.

About Laura Knowles

Laura is currently HR Business Partner at Second Chapter where she advises clients on a range of HR matters including performance management, disciplinary and grievance, attendance management, flexible working, and employee engagement. With a HR career spanning more than a decade, she has worked for A4E, Cambion Electronics, BresMed Health Solutions and Kirklees Council. Laura lives in Sheffield with her husband, two daughters and their two cats.