Autumn Budget roundup – the future of IR35
Tuesday 30th October 2018
In one of the most anticipated announcements made by the government this year, yesterday saw Chancellor Philip Hammond unveil the economic plan for the UK over the next 12 months with the announcement of the Autumn Budget.
Whilst many topics were covered during the Budget, the contracting and recruitment communities were eagerly awaiting the fate of off-payroll rules, specifically with regards to the extension of IR35 reforms into the private sector.
Following the consultation into the reforms it has been decided that their introduction will be delayed until April 2020 and will only apply to medium to large businesses.
What does this mean for PSCs and recruiters?
In April 2017, IR35 reforms came into force for contractors operating within the public sector. These reforms moved the responsibility of identifying a contractor’s IR35 status from the contractor themselves to the end client or agency.
For clients, many of whom had very little experience in dealing with IR35 matters, this meant that they firstly had to educate themselves on the legislation, and subsequently amend their processes to ensure the correct status was identified, and the adequate deductions made from a contractor’s pay.
Due to mounting issues with public sector reforms, the industry has been wary of their extension into the private sector, with many calling for the government to reassess the way in which they are implemented and how businesses can seek support throughout. This delay in their introduction ultimately means that businesses have adequate time to analyse, amend and adapt their processes in order to comply.
What else was covered?
In addition to IR35 the Budget also covered a number of other topics that will impact contractors.
National living wage:
From April 2019 the National Living Wage will rise from £7.83 to £8.21.
Tax-free personal allowance threshold:
This will rise to £12,500 from April 2019.
For the ninth year in a row, fuel duty has been frozen.