IN A QUITE sensational move, Kwasi Kwarteng has seemingly done away with one of the most maligned pieces of tax legislation: the IR35 rules. Or at least some of it.

Here at Shipleys Tax we briefly look at the one of the most surprising aspects of this now quite eventful Mini-Budget.

IR35 repeal

The Chancellor confirmed workers providing their services via an intermediary vehicle, 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The IR35 reforms will be repealed from April 6 2023 according to the mini-Budget.

The previous 2017 and 2021 reforms to the off payroll working rules (also known as IR35) required that the end client, and not the contractors they hire, were responsible in determining 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.

This a hugely welcome reform to a much maligned and flawed area of tax law. It brings some certainty as to who is liable and minimises the risk that genuinely self-employed workers are impacted by the underlying off-payroll rules.

IT contractors, locums and many other service professionals will breathe a sigh of collective relief that a piece of legislation that has had a damaging effect on business and contractors’ livelihoods for the last five years has now been repealed.

More to follow.