Company Tax planning

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The IR35 reforms will be repealed from April 6 2023 according to the mini-Budget.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that has had a damaging effect on business and contractors’ livelihoods for the last five years has now been repealed.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.

AS PART OF the new government’s mini-budget, the UK chancellor Kwasi Kwarteng travelled back in time to reverse previously planned tax rises by announcing a raft of tax cuts, including a surprising removal of the 45% income tax rate.

We have highlighted the main points below:

Summary Budget measures

*****UPDATE****

IR35/Off-payroll working

Huge change here – the changes made to the off-payroll working rules from April 2017 and April 2021 will be reversed. From 6 April 2023 the responsibility for determining employment status will revert to the individuals doing the work.

• Income tax
  • 45% Additional rate abolished (40% top rate now)
  • Basic rate cut to 19% (from 20%)
  • both to take effect from April 2023;
  • dividend rate reduced (reversing previous hike)

• NIC – April 2022 increase in NIC reversed from 6 November and Health & Social Care Levy scrapped
• Corporation tax to remain at 19% – planned 2023 increase to 25% cancelled
• Off payroll working/IR35 – previous legislative changes to be repealed from April 2023
• Introduction of VAT-free shopping for overseas visitors
• New “Investment Zones” with enhanced tax reliefs and relaxed planning frameworks
• Removal of cap on bankers’ bonuses
• SEIS and CSOP limits to be increased. EIS and VCT reliefs will be extended beyond 2025
• Annual Investment Allowance to stay at £1m for capital allowances
• No stamp duty on first £250,000, for first time buyers that rises to £425,000 – comes into operation today

Our in-depth analysis of the Mini Budget will follow.

A SAD, SOMBRE DAY for the UK and Commonwealth.

Most of us have only known the reign of Queen Elizabeth for as long as we can remember. Whatever your views on the monarchy she was arguably a remarkable woman – working tirelessly almost to her last day it seems. Spanning over 70 years she was a constant presence in the background of political, economical and natural change.

In an age where upstanding figureheads are painfully uncommon, she was an inspiration to many; her dignity, humility and graciousness won many hearts here in the UK and around the world. At times the Royal Family was controversial yes, but she was arguably the Queen for the people and the people loved her back.

A personal moment of loss for the Royal Family and many who felt they knew her, an era defining moment for the UK and its future.

Office Closure

Bank Holiday Monday 19th September 2022

As a mark of respect, the Shipleys Tax team will be taking the day off on the day of The Queen’s funeral, Monday 19th September and our office will be closed.

Normal business will resume on Tuesday 20th September.