One of the key questions on the lips of many contractors and recruiters in the run up to the Autumn Budget 2017 was whether IR35 off payroll reforms would be rolled out beyond the public sector. Well that question was partly answered today with the announcement of a formal consultation into off-payroll working in the private sector.
Following the introduction of IR35 reforms into the public sector in April 2017, it has been widely anticipated that it was only a matter of time before focus turned to the private sector. With an objective on maintaining fairness and a level playing field between public and private spheres, it seemed almost inevitable that the scope of reforms would be increased.
Today’s 2017 Autumn Budget delivered by Philip Hammond states the following in relation to IR35:
“3.7 Off-payroll working in the private sector – The government reformed the off-payroll working rules (known as IR35) for engagements in the public sector in April 2017. Early indications are that public sector compliance is increasing as a result, and therefore a possible next step would be to extend the reforms to the private sector, to ensure individuals who effectively work as employees are taxed as employees even if they choose to structure their work through a company. It is right that the government take account of the needs of businesses and individuals who would implement any change. Therefore the government will carefully consult on how to tackle non-compliance in the private sector, drawing on the experience of the public sector reforms, including through external research already commissioned by the government and due to be published in 2018.”
The consultation process is a clear sign post of intent for reform and perfectly matches the same process previously undertaken for public sector reforms. If the previous process is anything to go by, then it would seem almost inevitable that its recommendations are already predetermined. It now seems increasingly likely that further IR35 change is just a matter of when, not if. Indeed it’s entirely possible that the consultation may conclude quickly before the 2018 Spring statement making potential changes only a few short months away.
For those working in the private sector and paid through their own limited company, these potential reforms may significantly impact their earnings with assignments being deemed inside IR35.The only way for affected contractors to maintain their current rate would be to use an umbrella company solution. As one of the most longstanding and respected providers in the marketplace, our umbrella solution ticks all the right boxes and provides an immediate remedy for this looming predicament. Contact us now for more information and a free no obligation discussion.