There appears to be a warmer wind blowing from Whitehall as the new Chancellor of the Exchequer, Kwasi Kwarteng, made some welcome announcements during his mini Budget today in Parliament. After what has been a historic week he took to his feet to announce a number of measures to boost growth in the UK economy.
Perhaps the most notable announcement, from a contracting point of view, is that he intends to repeal the Off Payroll changes this Government introduced to IR35, initially in 2017 and latterly in 2021. The repeal of the changes will mean that the responsibility and control of determining the tax status of the assignment will now no longer rest with the end client but revert back to the contractor. The contractor will take back the reins of control for making the decision on the tax status of the assignment, and with this the blanket approach to decisions taken by end client will stop. This is not going to happen overnight but contractors will be back in control from April next year. This gives time for them to consider what contracts they would like to work on and their arrangements going forward. It may mean that those contractors who left the temporary market last year may well feel that the conditions will be right in April to return. This can only be a good thing.
The Chancellor also announced that they will reduce National Insurance Contributions as soon as November and cancel the Health and Social Care Levy. This decision will be felt most by those working through an umbrella company, who have been impacted by the introduction of the NICs increase through the Levy. For contractors currently working through their limited company they now no longer face a hike in Corporation Tax which was due to increase to 25% but will be at 19%.
At a time when the general public has been bracing itself for a harsh winter with the increased cost of living, those working as contractors can finally have something to celebrate.