Contracts Update: New Chancellor Reverses IR35 Repeal

Newly appointed Chancellor Jeremy Hunt has stated he will reverse almost all tax measures announced three weeks ago by Kwasi Kwarteng, including changes to IR35 off-payroll working rules.

With the appointment of Jeremy Hunt as the new Chancellor comes with it the news of the reversal of plans to repeal the IR35 off-payroll working reforms of 2017 and 2021 next April in a move that will further impact the contracts industry.

Yesterday [17 October 2022], Hunt formerly stated he hopes the measures will “provide confidence and stability” with his rollback of nearly all economic measures, excluding the cuts to National Insurance and stamp duty which remain.

“We will no longer be proceeding with the cuts to dividend tax rates, the reversal of off-payroll working reforms, the new VAT-free shopping scheme for non-UK visitors, or the freeze on alcohol duty rates,” Hunt stated.

In a statement to ContractorUK, HM Treasury said keeping the 2017 and 2021 reforms in place will “cut the cost of the government’s ‘growth plan’ (the official name of Kwarteng’s mini-budget) by around £2 billion a year.”

"Hunt formerly stated he hopes the measures will “provide confidence and stability” with his rollback of nearly all economic measures, excluding the cuts to National Insurance and stamp duty which remain."

Addressing the news, the Freelancer and Contractor Services Association (FCSA) expressed disappointment that the previously announced rollback of off-payroll working rules has been thrown out by the Chancellor.

FCSA CEO Chris Bryce told Recruiter magazine this may add some ‘confusion’ to the contractor marketplace. He commented: “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.”

With IR35 compliance back on the agenda for a significant number of employers, our contracts team and Understanding Solutions teams remain on hand to help businesses navigate the post-IR35 landscape.

The next fiscal statement is pencilled in for 31 October 2022.