On 23rd September, the Chancellor announced that the off-payroll working rules, originally introduced for the public sector in 2017 and later expanded to the private sector in 2021, will be repealed from 6th April 2023. Subsequently, on 17 October, the government reversed course and has now advised no changes will be made and that the off-payroll rules will continue to apply.
The off-payroll working rules are targeted at workers who provided their services to an engager via a personal service company. It was felt that many of these workers should be treated as employees, and therefore pay additional tax and national insurance.
Responsibility for determining the employment status of these workers originally sat with the personal service company, however, the off-payroll rules shifted this responsibility to the engager. This led to many workers being forced into employment and closing their personal service companies. The complexity of rules also created significant costs and administration for the engagers.
This significant reversal will be disappointing for many contractors and those businesses using their services. All eyes are now on the Government to announce a review into the ‘IR35’ rules as it had previously stated that the change ‘will free up time and money for businesses that engage contractors, that could be put towards other priorities’. Unfortunately, many contractors, will feel let down by this chain of events and now need the Government to provide greater certainty and support to a vital sector of the economy.