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IR35 U-Turn or the Hokey Cokey?

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IR35 U-Turn or the Hokey Cokey?

​With a hint of the Hokey Cokey ‘Put your IR35 plan in, IR35 plan out’. You may have seen The Chancellor of the Exchequer Jeremy Hunt has chosen to scrap the plans to repeal the Off-Payroll IR35 Reforms, which Kwasi Kwarteng, previously announced in his mini budget on 23 September 2022.

Kwarteng proposed that, with effect from 6 April 2023, irrespective of whether the contractor was working in the private or public sector, the contractor would once again be responsible for determining their own employment status and paying the appropriate amount of tax and NICs under IR35.

Jeremy Hunt has now confirmed that this change will not take effect and the status quo will continue after April 2023.

This means that the time and money spent by businesses on preparing for the original IR35 change will not have been wasted, although a reversal of IR35 may well have reduced costs for thousands of businesses, it would of also received anger from contractors and companies who were set up on the based on the legislation itself, with relief from Banks who were looking forward to the changes as they were heavily impacted by the IR35 legislation before. With a rapid U-turn, hopefully businesses will not have spent much time planning for the change. The IR35 situation is an example of the wider confusion about what is happening with proposed changes to employment law. Here at SoCode we would usually advise businesses act quickly in response to government announcements about employment and tax regulations however, in current time it may be prudent to wait a few weeks!

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