Skilled workers to benefit from scrapping of IR35 tax rule
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Shake-up in company payroll rules that will provide major job boost for skilled workers as IR35 legislation is scrapped
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A shake-up in corporate wage rules announced in the mini-Budget last week, experts say, will provide a major job boost for skilled workers, such as computer consultants and those in the financial sector.
The repeal of the IR35 legislation – which forces many formerly self-employed workers to be treated as employees by companies wishing to use their services – will take place in April.
It is expected to have a dramatic effect in areas such as IT consultancy, where employees often prefer to rent out their skills to several companies rather than just one major employer.
Boost: The repeal of IR35 legislation – which sees many formerly self-employed people being treated as employees by companies – will take place in April
There will also be a knock-on effect for accountants and tax and legal experts in finance, who will be brought in to re-sign contracts for employers and the self-employed to address the rule changes.
The legislation has cost the industry millions of pounds to set up in recent years.
Seb Maley, chief executive of tax advisor Qdos Contractor, says: ‘This is music to the ears of those who don’t want to be desk-bound with a single nine-to-five job, but want the flexibility to work for themselves and a variety of others. It also relieves companies of the legal and financial responsibility to treat them as employees.”
Under IR35, contractors working for a company often get the same taxes withheld from earnings as an employee, even if they don’t always have the same employment rights, such as sick leave and vacation days.
It was introduced for those working in the public sector in 2017 and the private sector in 2021.
Penny Simmons, legal director of law firm Pinsent Masons, said: “Sharing the rulebook will have a positive impact for many companies across the country, but many millions of dollars will still need to be spent rewriting compliance regulations. .’
Earlier this year, a report from spending watchdog the National Court of Auditors pointed out that “significant investment” was needed to ensure companies adhered to IR35 rules.
But the new chancellor, Kwasi Kwarteng, said repealing the IR35 legislation is not just about saving businesses, but removing complexity from the tax system.
Maley says: ‘This is a real government statement of intent to support smaller, often one-man bands that aren’t always listened to.’