Freelancers and contractors got a last-minute reprieve from the IR35 reforms a year ago, when the government opted to delay introducing them on 5 April 2020 amid the Covid-19 chaos. But the reprieve was only temporary, and for many businesses, concern is now growing about the potential impact of the changes when they come into effect early next month.
The reforms make businesses that use freelancers and contractors responsible for determining their tax status – whether they really are self-employed contractors, or whether they are effectively employees that should be paid through the PAYE tax system. Many freelancers and contractors have received lengthy questionnaires from clients in recent weeks, and fear they could face a loss of income or higher tax bills following the changes.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
This will require clients to certify them as outside the scope of the IR35 rules, but the tests for determining this are subjective rather than definitive. Broadly, HM Revenue & Customs is focused on working relationships. Where contractors and freelancers retain control over how and when they work, where they can delegate the work, and where the client is not obliged to give them work, they are likely to escape IR35. But all clients have to make their own assessments of each freelancer and contractor they use. Those that have not heard from clients may now need to make inquiries or risk an unexpected tax surprise. In IPSE’s research, one in four contractors said their clients were either uncertain or had made no indication of what they would do in response to the IR35 changes.
-
Reeves warned against property tax shake-up – 3 ways it could backfire on first-time buyersRachel Reeves reportedly has her eye on high-end property taxes in the upcoming Budget, but there are concerns a shake-up could unintentionally hamper those trying to get on the housing ladder
-
Average Brits want to retire five years before they can – who has the widest retirement gap?Brits are expecting to work for longer than ever but there are big disparities in the number of extra working years predicted. A small tweak could help close the gap
-
Global investors have overlooked the top innovators in emerging marketsOpinion Carlos Hardenberg, portfolio manager, Mobius Investment Trust, highlights three emerging market stocks where he’d put his money
-
Investors should cheer the coming nuclear summerThe US and UK have agreed a groundbreaking deal on nuclear power, and the sector is seeing a surge in interest from around the world. Here's how you can profit
-
Healthcare stocks look cheap, but tread carefullyShares in healthcare companies could get a shot in the arm if uncertainty over policy in the US wanes, but are they worth the risk?
-
The Palace of Westminster is falling downThe Palace of Westminster is in need of repair, but the bill is prohibitive, says Simon Wilson
-
'Gen Z is facing an AI jobs bloodbath'Opinion It has always been tough to get your first job, but this year, it's proving tougher than ever. AI is to blame, says Matthew Lynn
-
Should the Online Safety Act survive?The Online Safety Act, a measure to safeguard children, is having unintended consequences
-
The secret behind Sweden’s successOpinion Sweden's stock market is in rude health, says Max King. Why can't Britain follow suit?
-
Prabowo Subianto: Indonesia’s Deng XiaopingPrabowo Subianto, like his Chinese hero, is taking power in his 70s with big ambitions for his country. Yet many view his return to politics with dread
