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Reforms to IR35 were introduced in April 2021.

This meant that workers routinely working with the same contractors had to be counted as PAYE staff, or face action from HMRC. This change was widely criticised by former self-employed workers who saw their tax bills rise and by contractors who faced bigger bills and burdens from direct employment.

In the Mini Budget chancellor Kwasi Kwarteng announced: “We can simplify the IR35 rules, and we will. Reforms to off-payroll working have added unnecessary complexity and cost to many businesses.”

The IR35 Reform will be scrapped from April 2023 for public and private sectors. This means that freelance workers will be able determine their own employment status to assess their own tax again.

After the existing rules were introduced, a large number of contractors are reported to have left the market. The government are now hoping that by scrapping the existing regime, contractors will be encouraged to come back, at a time when skilled people are needed within the industry to grow the economy.

 

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