Complicated IR35 tax rules will now NOT be scrapped in another Mini-Budget U-turn, new Chancellor Jeremy Hunt announced this morning.
It comes shortly after Prime Minister Lizz Truss sacked former Chancellor Kwasi Kwarteng on Friday, less than five weeks after he was appointed.
Kwarteng’s disastrous mini budget announced that IR35 tax rules would be scrapped.
The change would have meant self-employed workers would be responsible for determining their own employment status.
But new Chancellor Mr Hunt has announced this morning that the change will no longer be taking place.
This affects workers who have set themselves up as private companies, including delivery drivers, building contractors and many others who typically work for other businesses and are not on their payrolls.
Under IR35 rules, the business you work for is responsible for deciding your tax status - not the worker.
The aim is to ensure all workers are paying the appropriate amount of tax and national insurance contributions.
But it means some people can end up paying unnecessary costs.
Speaking of the IR35 system in his Mini-Budget last month, former Chancellor Kwasi Kwarteng said he will repeal IR35 legislation.
In his announcement, he said: "We can also simplify the IR35 rules – and we will.
"Reforms to off-payroll working have added unnecessary complexity and cost for many businesses.
"We will repeal the 2017 and 2021 reforms. Of course, we will continue to keep compliance closely under review."
The repeal, which was set to come into force in April 2023, aimed to "free up time and money for businesses that engage contractors, that could be put towards other priorities".
And to minimise "the risk that genuinely self-employed workers are impacted by the underlying off-payroll rules.”
With the reforms now staying in place, the cost of the Government’s Growth Plan is expected to be cut by around £2billion a year.
Dave Chaplin, CEO of tax compliance firm IR35 Shield said: "The Government's initial commitment to repealing the Off-Payroll rules was a sensible initiative and would have been a significant step forward for the UK's army of self-employed people who are critical to the Governments' pro-growth agenda.
"Repealing Off-payroll would have returned an essential level of certainty to contract transactions in the market economy, leading to economic growth.
"Instead, Off-payroll will continue to cause significant harm to the self-employed, major businesses, the government, and the economy.
