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 business 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, for many contractors, they 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.
Date published 23 Sep 2022 | Last updated 20 Oct 2022
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