Will Rishi Sunak Scrap the Off Payroll IR35 Changes?
Here’s what Rishi Sunak says about Contractors and IR35 when talking about the Off Payroll changes:-
It is “going to mean some changes because some people unfortunately were operating in a way that they weren’t paying the tax they probably should have been, because essentially they were employees but they were being taxed as if they were self-employed. And there is quite a difference there”.
Groan!
So that’s what the likely next Prime Minister thinks about contractors and the way they operate.
Should Contractors with Personal Service Companies be Treated like Small Businesses or Employees?
It seems that the crucial divide is between those who believe that the self employed, with their limited companies, should be treated the same way as big businesses are treated or whether they should be treated the same way as employees are treated?
It should be noted hear that this is only for tax purposes as in all other ways those same people think that contractors should be treated as owners of small businesses, e.g. when to comes to sick pay, holiday pay, maternity pay etc.
Who Believe Contractors Should be Treated Like Big Businesses?
Liz Truss and Kwasi Kwarteng said that people operating through limited companies should be treated the same was as big businesses are treated.
All other Prime Ministers and Chancellors since IR35 was set up in 2000 believe that those running limited companies should be treated (for tax purposes) the same way as employees. Indeed they see them mainly as tax dodgers.
What Changes Did Chancellor Kwarteng Propose to Make to Off Payroll Rules?
Contractors were delighted and surprised when Kwasi Kwarteng’s mini budget proposed to rescind the off payroll rules for April.
Those rules pushed who made the decision on a contractor’s IR35 status to the client company. Kwasi Kwarteng and Liz Truss pushed that decision back onto the contractor.
However, the new Chancellor pushed it back onto the client company again – and Liz Truss was powerless to stop him.
What’s the Future for Contractors as Regards the Off payroll IR35 rules?
If Rishi Sunak comes back as either Prime Minister or Chancellor it looks pretty bad for contractors. It would be the same for Boris Johnson.
Indeed the only two people who can become the next Prime minister were Prime Minister and Chancellor when the Off Payroll IR35 rules were implemented in the private sector in 2021.
So, there doesn’t seem any hope that the Off Payroll IR35 changes will be rescinded anytime soon.
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