Home Business News Contractors call for reversal of IR35 reform at the Spring Budget

Contractors call for reversal of IR35 reform at the Spring Budget

by Amy Johnson LLB Finance Reporter
26th Feb 24 10:18 am

Complex tax rules are primary concern for freelancers and contractors, alongside high tax rates and unregulated umbrella sector

With the Spring Budget taking place next week (Wednesday 6th March), the UK’s freelancers and contractors are calling on the government to rethink the controversial and complex ‘off-payroll working rules’.

This is according to exclusive research from Qdos, an IR35 compliance specialist. Its survey of nearly 900 independent workers offers essential insight into the interests of the self-employed – who could be crucial in deciding the next general election.

Over two-thirds of those surveyed want the government to scrap the off-payroll working rules – seen as the main factor behind poor business performance in 2023.

Also known as IR35 reform, these rules were introduced in the public sector in 2017 and the private sector in 2021, and made businesses responsible for determining the tax status of the contractors they engage.

Those deemed ‘inside IR35’ are treated as employees for tax purposes and face paying up to 30% more in tax without receiving any employment rights or benefits in return – a situation described as ‘zero rights employment’.

In addition to reversing these rules, contractors and freelancers want the government to cut Corporation Tax back to its lower rate and deliver on promises to regulate the umbrella industry amongst other things.

Several Conservative MPs are also unhappy with the off-payroll rules and the high levels of taxes facing the self-employed and taxpayers at large. As a result, the government is under pressure to act – with the Spring Budget potentially the last opportunity to win votes ahead of the next general election.

Qdos CEO, Seb Maley, said, “With the Spring Budget just a week away, contractors and freelancers have made their feelings crystal clear. The off-payroll rules are needlessly complex and are contributing to poor business performance for these workers.

“As well as IR35 reform, these workers are right to draw attention to the difficult tax landscape they currently face; something that has only gotten more challenging under this government.

“The government’s also under pressure from its party members to address the fundamental flaws of the off-payroll rules and the country’s high tax burden. Clearly, something needs to give. The Chancellor would be wise to listen to the concerns of flexible workers, and his peers, ahead of next week’s Budget.”

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