Sunak did not mention IR35 even once during his budget speech for 2021, which was a change of pace after the Spring and Autumn fiscal announcements of this past year.
The contracting sector is viewing the off-payroll rules as a confirmed plan now, as there has been no further talk about postponing the April 6th roll-out.
This means that there are four weeks until the roll-out becomes real and all of the worries of contractors and experts for the past year come to pass. The only spot of brightness in the picture is that there was no mention of the feared one-client-only-tax that had been mentioned before the budget.
Experts are increasingly worried over the fate of the contracting sector in the UK because there has been so little done to help contractors during the pandemic and seemingly no understanding of what it means to try to earn a living as a contractor.
With the lack of support that has been offered to contractors throughout the pandemic, the small overtures toward SEISS and the CJRS seem like a small band-aid over a growing wound.
The government clearly has no desire to examine the damage that IR35 will do to the contracting sector, and the promised tax hike for Corporation taxes to 25%, if you make over £250,000, seems like a dangerous insult to injury.
Experts are now stating that they don’t even expect there to be mention of IR35 on Tax Day. The course ahead seems to be set in stone, despite the many red flags that have been brought to the government’s attention.
Umbrellas No Longer Within Off-Payroll Rules
The Chancellor did mention that there had been changes and clarifications that will make sure that Umbrellas no long are trapped by IR35 themselves. This means that contractors can have some peace of mind about contracting through them once the roll-out is over.
New documents that have been released indicate that the new tax rules combined with IR35 will net the government more than £3.1 billion. This amount of money is far greater than what the original state shortfall was, proving that the pressure that has been behind IR35 has been motivated by greed all along, rather than by the need to fulfil a shortfall for NIC.
Many contractors will not be faced with higher taxes and the looming threat of contracts that are ongoing that no longer fit the off-payroll rules. These contractors have elected to work outside of IR35 but now may find themselves inside of it through no fault of their own.
Compliance is expected to be a continuing focus for HMRC, and contractors should be sure that they review their contracts so that they are not caught inside of IR35. Non-compliant providers are not being netted by the HMRC as they had promised, and contractors will have to know the rules better than their engagers going forward.
