No news on IR35 in private sector; fate of contractors still unclear

No news on IR35 in private sector; fate of contractors still unclear

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Posted ByTeam Bradleys
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When Chancellor of the Exchequer Phillip Hammond presented the first ever Spring Statement of the country on 13 March 2018, the contractor community thought they would finally get some clarity on the IR35 reforms in private sector. However, such was not the case.

Not only was this subject left out from Mr. Hammond’s speech but also conveniently ignored in the document that was made live once the session concluded. So, where does this leave the PSCs? Hanging in the air? Probably.

Naturally, lack of clarity on IR35 in the Spring Statement has given birth to many questions, with experts and contractors in the UK having their opinions. Let us try to answer some of them:

Are public sector contractors still struggling?

Unfortunately, yes.

It has been a year since the reforms were implemented in the public sector. However, the bodies functioning in the sector still don’t have the necessary resources to review all the contracts properly. That has sadly led many contractors to be unfairly treated.

Moreover, the “blanket decision” route to push even the most genuinely self-employed contractors into opting for payroll solutions has backfired. Why? What’s the end result of this? Such contractors are sadly now overpaying taxes.

Are PSCs in private sector at a loss post implementation?

It seems like that.

If the government rolls out IR35 reforms in the sector, then contractors may see costs rise by 17.3% once the extra National Insurance and other levies are factored in. In the private sector, UK businesses would have to deduct tax under PAYE from payments made to certain companies they engage where, if the company was ignored, the contractor doing the work would be treated as an employee.

Is April 2020 a more realistic start year?

According to PwC, it is.

The government is waiting for the Employment Status consultation to close in June. And no major news on the IR35 legislation is anticipated until the Budget due in autumn. Therefore, the tax giant is of the opinion any changes to both Employment Status and IR35 will be delayed until April 2020.

Keep yourself informed

History is getting repeated. Remember when the reforms were announced to be rolled out in the public sector in 2016 and how much chaos that ensued? The same is happening again – only now in private sector.

Let us wait and watch

While the government takes its time to figure out what it needs to do next, why don’t you grab a free copy of the Spring Statement?

In case you have any queries on how Spring Statement will affect you professionally, please write to us on accounts@bradleyscontractors.co.uk or call us on our Tax Helpline 020 3507 0022. The Bradleys staff will be happy to navigate you towards a direction that is perfect for you.