Off-payroll working reforms to be extended to private sector


Read more updates on the Autumn Budget 2018 in Tuesday’s Daily News email

Autumn Budget 2018: The government is to extend reforms to the taxation of off-payroll working to the private sector, Chancellor Philip Hammond (pictured) has announced in his 2018 budget.

The changes to the rules, known as IR35, have already been rolled out to the public sector, meaning responsibility for applying the correct taxation for off-payroll workers has moved from individuals to the organisation, agency or other third party engaging the worker.

The government will delay the reforms to the private sector until April 2020, and has announced that small organisations will be exempt. This, according the treasury, will minimise the administrative burdens for the vast majority of those engaging off-payroll workers. HMRC will also provide support and guidance to medium and large organisations ahead of implementation.

Nigel Morris, employment tax director at MHA MacIntyre Hudson, said:“Reform of the IR35 rules is seen as a less politically controversial way to raise money for the treasury, in the absence of parliamentary support for an increase in National Insurance contributions from the self-employed.

“What’s concerning is that the consultation this move is based on is too narrow in scope, ruling out some previous options that had real merits. The government needs to be open-minded in how it delivers continued IR35 reform. The public sector roll-out has not gone smoothly and it’s important these lessons are taken on board.”

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Ian Brinkley, acting chief economist for the CIPD, added: “It is disappointing the Chancellor has decided to push ahead with extending the IR35 tax reforms from the public sector to the private sector, as this will result in significant additional red tape for employers and runs contrary to his stated intention of boosting enterprise in the UK.

“However, we are pleased that the government has taken on board the need to phase in these changes from April 2020. What is also crucial in the run-up to implementation of this tax reform will be the provision of good quality advice and guidance for employers from HMRC.”