The Leading News & Information Service For The Facilities, Workplace & Built Environment Community

IR35 Repealed – What Does it Mean for FM?

IR35 Repealed – What Does it Mean for FM?
03 October 2022 | Updated 06 October 2022

It is hoped that the recent scrapping of IR35 reforms will encourage a more flexible labour market and ease skills shortages.


What is IR35?


IR35 concerns whether or not an individual contractor or freelancer ought to be deemed an employee on payroll for taxation purposes.

If a contractor provides services through their own limited company or another intermediary, the IR35 rules ensure that the contractor pays the same Income Tax and National Insurance contributions as an employee. Previous to IR35 reforms, contractors assessed their own tax liability.

This affects both the public and private sector, and firms are accountable to HMRC on their decision and responsibility for arranging for the taxes to be paid.

The decision as to whether a worker is on or off-payroll is usually decided on criteria such as the contract in place, substitution arrangement, the working pattern, equipment required, and the length of time services will be provided.


Why is IR35 Being Repealed?


As part of Kwasi Kwarteng’s “mini-budget,” these IR35 reforms to off-payroll working will be repealed from April 2023, and freelance workers will once again assess their own tax. In his speech to parliament, the Chancellor of the Exchequer said that the rules needed to be simplified and that “reforms to off-payroll working have added unnecessary complexity and cost for many businesses.”

According to Construction Inquirer, self-employed workers saw their tax bills rise and contractors faced bigger bills from direct employment under the rules.

In 2020, a report from the House of Lords Economic Affairs Finance Bill Sub-Committee found that ministers had “not sufficiently analysed” the effects of IR35, citing problems such as contractors being laid off in preparation for the reforms.

Lord Forsyth of Drumlean, Chair of the House of Lords Economic Affairs Finance Bill Sub-Committee, said at the time: “Contractors already concerned by these uncertain times now have the added worries of paying more employment taxes and having their fees cut by clients making additional National Insurance Contributions. Also concerning, is the number of companies getting rid of contractors in anticipation of the implementation of these new rules.”

The government hopes that the repeal will free up time and money for businesses like facilities management service providers whilst also “minimising the risk that genuinely self-employed workers are impacted by the underlying off-payroll rules”.

Picture: a photograph of three wooden cubes balanced on gold coins that spell out the word "tax". Image Credit: Pexels

Article written by Ella Tansley | Published 03 October 2022


Related Articles

IR35 Rule Changes – What Does It Mean For FM?

Ahead of changes to off-payroll working rules (known as IR35), some FM businesses are feeling unprepared for the changes. Particularly following the changes in...

 Read Full Article
New Chancellor Jeremy Hunt Cancels IR35 Repeal

In a televised statement, new Chancellor of the Exchequer Jeremy Hunt said he will reverse “almost all” of the tax measures announced in Kwasi...

 Read Full Article
New Rental Tax Rules Could Cost Investors £Millions

The latest taxation changes to commercial and residential property could cost non-UK companies £millions. The latest set of changes come in to force on 6 April...

 Read Full Article
Mitie Wins Security Contract With HMRC

Mitie has secured a new five-year security contract for His Majesty’s Revenue and Customs UK estate. The £15 million deal will span 40 sites, including 12...

 Read Full Article
Spring Budget 2024 – What FMs Need to Know

Jeremy Hunt has published HM Treasury’s Spring Budget for 2024 – let’s look at the main points concerning those working in facilities...

 Read Full Article
Churchill Group Becomes Employee Ownership Trust

Soft services provider Churchill Group has announced that it will move to an Employee Ownership Trust model. This is when a company sells their shares to an...

 Read Full Article
Inadequate IT Systems, Incomplete Data and High-Cost Leases  – Inside the Report That Criticises Government Property Management

Reforms to manage the government’s vast property estate are based on “incomplete data” that risks them being locked into long-term, high-cost...

 Read Full Article
Kwarteng’s Growth Plan – Reactions from the Commercial Property Industry

Chancellor Kwasi Kwarteng's Growth Plan 2022 has been described as both “a fiscal and moral outrage” and the beginning of a “virtuous cycle of...

 Read Full Article
BESA to Help Cut Red Tape for Contractors

The Building Engineering Services Association has become the first trade body to adopt a new industry agreed prequalification standard that promises to cut expensive and...

 Read Full Article
Government Says it Will Challenge “Unrealistically Low Bids”

Contractors who submit unrealistically low bids for public sector contracts will be subject to “intense scrutiny”, according to a senior government...

 Read Full Article