New Chancellor of the Exchequer Jeremy Hunt has announced the government will not be repealing the off-payroll working rules from April 2023 – just weeks after ex-Chancellor Kwasi Kwarteng said the government would ”repeal the 2017 and 2021 reforms” from April 2023. This news will undoubtedly frustrate and disappoint all stakeholders within the temporary supply chain – especially contractors and freelancers. Please keep reading and learn more about this breaking news and how key figures within the sector have reacted.
Presented to parliament in September 2022 by ex-Chancellor of the Exchequer Kwasi Kwarteng, The Growth Plan 2022 outlined a series of government strategies to boost the UK’s economy. Part of the Growth Plan 2022 included details on the government’s plan to scrap the off-payroll working rules rolled out into the public sector in 2017 and the private sector in 2021. The Growth Plan 2022 stated:
“The government will also repeal the complex changes to off-payroll working, allowing businesses to get on with business. Tax simplification will be embedded at the heart of the tax system as a core HM Treasury and HMRC priority”.
However, in an astonishing and unsatisfying back-track, new chancellor Jeremy Hunt announced the IR35 repeal would no longer be going ahead.
“Around half of the genuinely self-employed contractors” have been thrown “under the bus” – says Dave Chaplin
IR35 expert Dave Chaplin, CEO of ContractorCalculator, shared his views on the government’s U-turn regarding the off-payroll repeal announced a few weeks ago in the mini-budget. He said:
“The government’s initial commitment to repealing the Off-Payroll rules was a sensible initiative and would have been a significant step forward for the UK’s army of self-employed people who are critical to the Governments’ pro-growth agenda.
Repealing Off-payroll would have returned an essential level of certainty to contract transactions in the market economy, leading to economic growth. Instead, Off-payroll will continue to cause significant harm to the self-employed, major businesses, the government, and the economy.
Whilst we agree that tax avoidance measures are sensible, the Off-payroll rules over-extended, causing genuinely self-employed contractors to lose their rights to be their own boss.
The Conservatives U-turn on the repeal has thrown around half of the genuinely self-employed contractors under the bus and likely kissed goodbye to their success at the next General Election.
With the anti-growth effects of Off-payroll, it appears the pro-growth Conservatives have now joined the Anti-Growth Coalition – as the saying goes ‘, we are all in this together.”
The government has made a “spineless decision” – says Andy Chamberlain, Director of Policy at IPSE
Unsurprisingly, Dave Chaplin is not alone in expressing disappointment and frustration at the government for the backtrack on the IR35 repeal. Andy Chamberlain, Director of Policy at IPSE (The Association of Independent Professionals and the Self-Employed), said that he believes the decision is “spineless”. In an official response on IPSE’s website, Andy Chamberlain said:
“Today’s announcement will be a huge blow to thousands of self-employed contractors and the businesses they work with. The reforms to IR35 have created a nightmare for businesses seeking to engage talent on a flexible basis, while simultaneously forcing individuals out of business altogether.
We know that the government is well aware of the problems caused by this damaging legislation – the previous Chancellor said so at the mini-budget and the Prime Minister made it clear during her leadership campaign. Despite this, it has today taken the spineless decision to row back on its promise to repeal the reforms.
Businesses that were looking forward to an era of less complexity and less cost will have had those hopes dashed today. Our fear is this decision will lead to yet more work being off-shored to other territories and more people being forced to work through unregulated umbrella companies. The supposedly pro-business Conservative government has sent out a clear message today – it does not support people who work for themselves.”
Liz Truss will not “be able to credibly speak on fiscal policy for quite a while, if ever” – says Chris Bryce, CEO at the FCSA
Chris Bryce, CEO of the FCSA, shared his views on the government’s backtrack. In an article on the FCSA’s website, he said:
“The government realistically had little choice but to dance the Hokey Cokey on Kwasi Kwarteng’s so-called mini-budget. Markets and businesses react badly to uncertainty and steeper borrowing, and I hope that a steadier hand on the tiller will give both the markets and our industry some stability in the medium term. What is clear is that Liz Truss’ economic views have been supplanted by Hunt’s and the immediate market reaction indicates that it’s unlikely she’ll be able to credibly speak on fiscal policy for quite a while, if ever.
“As always I, and FCSA, stand ready to work with Jeremy Hunt, the Chancellor, and other ministers towards ensuring finding fully compliant, practical and workable solutions to the issues surrounding contracting and the whole temporary labour market in the UK.”
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