Government repeals reforms to the IR35 rules

Chancellor Kwasi Kwarteng has repealed the changes to the IR35 rules introduced from 2017 to 2021.

The IR35 reform will be repealed from April 6, 2023, according to this morning’s mini-Budget.

Speaking to the House of Commons today (September 23), Chancellor Kwasi Kwarteng said from April 2023, workers across the UK providing their services via an intermediary, such as a personal service company, will once again be responsible for determining their employment status and paying the appropriate amount of tax and NICs.

The 2017 and 2021 reforms to the off payroll working rules - also known as IR35 - were a tax law that required the end client, and not the contractors they hire, to decide if the working relationship resembles a self-employed engagement or employment.

Under existing rules, the fee-paying party (either the end client or recruitment agency) shouldered the liability.

The aim of the reform was to stop the promotion and misselling of disguised remuneration schemes, however the legislation has received criticism.

He said: “To achieve a simpler system, I will start by removing unnecessary costs for business. We can also simplify the IR35 rules and we will. In practice, reforms to off-payroll working have added unnecessary complexity and cost for many businesses. So as promised, by the Prime Minister, we will repeal the 2017 and 2021 reforms. Of course, we will continue to keep compliance closely under review.”

The changes will mean workers will once again be responsible for determining their employment status and paying the appropriate amount of tax and national insurance contributions.

The reform also minimises the risk that genuinely self-employed workers are impacted by the underlying off-payroll rules.

The changes have been branded “a mess”, “unpopular” and “puzzling”.

Experts expect the industry to react positively to this decision.

Steven Wynne