Many see the appointment of the new Chancellor in the UK as a great opportunity to call for the abolition of the IR35. Rishi Sunak was recently promoted to replace Sajid Javid as Chancellor of the Exchequer. The IR35 has been sighted as the biggest tax shake-up for the self-employed. Those affected warn that it will cause enormous damage to contractors and the wider economy, especially in light of Brexit.
Update March 2020
Update (19th March 2020): Due to the COVID-19 pandemic, the UK government has postponed this controversial tax reform for one year.
What is the IR35?
The legislation was introduced to address loopholes in UK law which allowed people to pay less tax and National Insurance. Prior to this, professional employees were able to convert their tax status to a Limited Company. They would then continue working for the same firm as ‘disguised employees’ saving themselves (and their employer), money.
According to media outlets, some organisations are planning to reduce the number of contractors hired and in some cases, relieve contractors completely until the confusion surrounding the new IR35 rules is cleared. On the brighter side, some sources claim that while organisations may reduce the number of contractors hired, there will be increased demand for seasoned professionals.
“The Recruitment & Employment Confederation (REC) and the Association of Independent Professionals and the Self-Employed (IPSE) warned the contractor market has already been severely affected ahead of changes in April to laws clamping down on tax avoidance.”.
According to research from the Association of Independent Professionals (IPSE), nearly a third (32%), of freelancers are planning to stop contracting in the UK because of the changes to IR35 due in the private sector in April. This will have a devastating effect on the market in the UK and while HRMC has provided some guidelines to ease the level of confusion, the impact is set to be huge.
If you are a UK based contractor and looking for a brighter future, consider Ireland as an option. We have plenty of open roles and specialise in IT contracting. We also work with tax specialists who can best advise you on your financial options.
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