Sajid Javid pledges review of IR35 changes

By Jyoti Rambhai
Editor

Editor of Modern Work and My Money, a finance magazine for the self-employed.

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Chancellor Sajid Javid pledged earlier this week that the next Conservative government would review IR35. However, this has not been mentioned in their manifesto.

The Liberal Democrats and the SNP have both included a review of this tax rule that affects millions of self-employed people in their manifesto. And the Labour Party also, seem to be suggesting something similar following recent statements from Shadow Business secretary Rebeca Long-Bailey.

The proposed changes to the existing off payroll working rules (IR35) come into effect in the private sector next April. They have been in place in the public sector since 2017 and refer to the shift of liability for making employment status determinations from the contractor to the end client.

The changes has received widespread criticism after it took effect in the public sector for key policymakers and representative bodies. Much of the criticism focuses on the negative impact of the changes, which include loss of skilled contractors, delays to big public projects and costs associated with court cases.

Commenting on BBC Radio 4’s programme Money Box last week, Javid said: “One thing in particular that I want to look at again are the proposed changes to IR35.”

He added: “I want to make sure the proposed changes are right to take forward, (and) I think it makes sense to include the proposed IR35 changes in that review.”

When the changes to IR35 were introduced in the public sector, they not only stifled freelancers, but worsened staffing problems for the NHS and many other essential public sector bodies.

IPSE (the Association of Independent Professionals and the Self-Employed) has welcomed Sajid Javid’s commitment to review the changes to IR35. However, it has warned parties must also pledge to halt the April 2020 roll-out of the changes.

Andy Chamberlain, deputy director of policy at IPSE said: “This will be welcome news to freelancers across the UK. When the changes to IR35 were introduced in the public sector, they not only stifled freelancers, but worsened staffing problems for the NHS and many other essential public sector bodies.

“Now, as April 2020 approaches, major banks and businesses – vital drivers of the UK economy – are starting to panic at the plans to extend the changes to the private sector. Some are even telling their contractors they must join as employees or stop working for them altogether. Out of fear of these changes, they are destroying their flexible workforce.

“To prevent further damage, the parties must fully commit to halting the April 2020 roll-out. Freelancers and businesses must be reassured they will not be hit by these ill-conceived and hugely harmful tax changes in Spring.”

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