IR35 - Does the general election have the answer for the private sector?
With a general election days away, it’s no surprise that IR35 has been getting some airtime from all the main parties. It’s a serious piece of legislation that could impact a significant proportion of the UK workforce (15% at the last count).
For anyone who’s managed to miss the IR35 drama so far (57% of self-employed people according to research by FreeAgent), here’s a quick refresher:
- IR35 was introduced in 2000 to deal with what the government refers to as ‘disguised employment’.
- It aims to ensure that those working via a personal service company (PSC) pay the same tax as an employee doing the same role.
- From April 2020, it will no longer be the contractors themselves who decide whether they are inside or outside, it will be the end client.
If this sounds like déjà-vu, that’s because the same thing happened in the public sector back in 2017. The feedback was mixed, with reports of a mass contractor exodus, and complaints that people were receiving inaccurate determinations placing them inside IR35 when they shouldn’t have been. So where does this leave the private sector reforms, days away from the public going to the polls?
Each of the main political parties have vowed to review IR35. Sajid Javid told BBC Radio 4’s Money Box that he wanted to ensure ‘that the proposed changes are right to take forward’, with Labour, the Liberal Democrats and the SNP making similar pledges. Dave Chaplin, the founder of Contractor Calculator, has been invited to meet with the Financial Secretary to the Treasury, so they are definitely making the right noises – but is that all they are?
Let’s face it, the 15% of the workforce likely to benefit from better IR35 implementation equates to a significant number of ballot papers, and the more cynical amongst us might suspect that this is just a ploy to win them over. With a general election this close to call, a promise just to delay IR35 could mean the difference between a Labour or a Conservative government on the 13th December.
Whatever happens, with only four months until the reforms are scheduled to kick in, it’s vital that both contractors and end-clients are examining their IR35 position, and taking the time to understand the impact it will have.
We have put together some briefing documents in order to help our clients and candidates understand these changes a little better. You can download the document relevant to you below.
For information on IR35 for our candidates - click here
For information on IR35 for our clients - click here