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Today, the Chancellor of the Exchequer, Kwazi Kwarteng, announced his ‘mini-budget’. This ought to be a strong candidate for understatement of the year. Sat within the 42 page document, which can be found HERE lies paragraph 3.44. It sits in the chapter headed “Growth” and is reproduced below in its entirety.
“3.44 The Growth Plan sets out first steps in taking complexity out of the tax system. The 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) will be repealed from 6 April 2023. From this date, workers providing their services via an intermediary will once again be responsible for determining their employment status and paying the appropriate amount of The Growth Plan 2022 23 tax and National Insurance contributions. This will free up time and money for businesses that engage contractors, that could be put towards other priorities. The reform also minimises the risk that genuinely self-employed workers are impacted by the underlying off-payroll rules.”
What does this mean for interims – indeed all 4.5M freelancers in the UK?
It means that IR 35 is on the statute books still and in April next year it will revert to how things were prior to the changes initiated from 2017.
It means that interims will be determining their own tax status again – which feels completely right in so many ways.
It does not address the ‘not-fit-for-purpose’ CEST tool which interims will still need to be aware of.
Why is this important? Interims, you, will still have to go through the process of evaluating the work and understanding the balance of whether it is inside or outside. It means having to adapt to any subsequent changes where you determine the work is inside. Who pays what tax, and where from, will be relevant.
It means that any case law remains. The only thing that has changed is that who decides has been given back to the worker. Arguably it should never have been taken away, but that is another story.
It means that umbrella companies may have to find alternative business from April.
It means that the most annoying part of the regulation changes since 2017, as interims and the IIM would see it, has been scrapped.
The IIM welcomes this unexpected announcement today and hopes that it is just the start of government recognising through statute that what we do is massive value added to the economy and we are all genuinely in business on our own account. We take risk, we accept discontinuity of income. We recognise our chosen professional path means no security through employment law. We are happy to pay the ‘right amount’ of tax through corporation tax, VAT, dividend tax and PAYE depending upon how we reward ourselves.
All in all, an interesting start to the new regime!
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The Institute of Interim Management (IIM) is the UK’s only professional body for independent Interim professionals. All our members operate in business on their own account as Interim Managers and Executives working at board or near-board level. The Institute is run by a Board and Executive Committees of seasoned Interim Managers and is committed to supporting and promoting professional Interim Managers working in the UK and internationally.
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