UPDATE – U-Turn on IR35 Changes


U-turn on the repeal of IR35 rules announced by Jeremy Hunt.  Please contact Nicola Tager and Lucy Cinnamond on the IR35 rules as it appears that the current off-payroll working rules will stay as they are.


In the Government’s recent mini-budget, Kwasi Kwarteng confirmed that the recent reforms made to the IR35 rules (or “off-payroll working rules”) will be repealed.

The reforms were introduced in 2021 (and 2017 for the public sector) and require medium and large companies who are the client (or “end-user”) to conduct status determinations for individual contractors who are engaged through intermediaries (for example, personal service companies). If the company finds that the individual would have been an employee but for the existence of the intermediary, the company is required to treat the individual as an employee for tax purposes and deduct income taxes and national insurance contributions from their fees. The aim was to prevent contractors operating as “disguised employees” and under-paying tax to HMRC.

The reforms attracted widespread criticism. Contractors have found their fees reduced, and companies have objected to the additional administration and potential liability for non-compliance.

In a surprise move, the Chancellor announced on 23 September 2022 that the reforms will be reversed from 6 April 2023. To be clear, the underlying IR35 rules will remain in place but the reforms introduced in 2017 and 2021 will be revoked.  This means that individual contractors providing their services via an intermediary will take back responsibility for determining their own employment status and accounting for their taxes appropriately to HMRC. The measure, which was described as “freeing up time and money for businesses that engage contractors”, will no doubt mean a return to more frequent use of contractors by many companies and has been generally welcomed. However, the Chancellor made clear that IR35 compliance will continue to be kept closely under review.

For further information, please contact Nicola Tager in our Employment Department