Empowering the Freelance Economy

IR35 Off-Payroll reforms repealed: initial reactions

Business Secretary Kwasi Kwarteng
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The news of the repeal of the IR35 OffPayroll reforms couldn’t have come at a better time for freelancers across the UK. And what a surprise the news was! No waiting months for some radical reform to happen. In one swift decision, hundreds of thousands of independent workers and the companies hungry to hire them, have had a great weight lifted from them.

We cover some of the initial reactions followed by the news.

The Chancellor of the Exchequer’s Growth Plan set out some “first steps” in taking the complexity out of the tax system, which gives hope that more good news is on its way in a larger Budget.

The Growth Plan statement said:

“The 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) will be repealed from
6 April 2023. From this date, workers providing their services via an intermediary will once again
be responsible for determining their employment status and paying the appropriate amount of
The Growth Plan 2022 23 tax and National Insurance contributions.”

This will free up time and money for businesses that engage contractors, that could be put towards other priorities. The reform also minimises the risk that genuinely self-employed workers are impacted by the underlying off-payroll rules

The rules as they stand until April 2023, based on the reforms to the off-payroll working rules (IR35), make hiring organisations responsible for determining the tax status of contractors – either ‘employed’ or ‘self-employed’. This applied to public sector hirers from April 2017, and private sector hirers from April 2021, making them liable for an engagement’s tax bill if the status is assessed incorrectly.

Contractors whose engagements are deemed to be ‘inside IR35’ by their clients are required to receive their earnings via a payroll – often through an umbrella company at the request of their client – rather than on a self-employed basis through their limited company.

Post IR35 repeal likely to boost freelancer job opportunities

Let’s rejoice for now

Many of us want to celebrate and enjoy the moment, such as IPSE’s Andy Chamberlain, perhaps before someone busts our bubble. And others, such as MP David Davis, are still pushing IR35 to be scrapped altogether.

“We are delighted that the new Chancellor agrees with what we have been saying for years – that the 2017 and 2021 reforms create unnecessary complexity for contractors and businesses. It is with huge relief that we welcome this dramatic shift in government thinking,” Andy Chamberlain, Director of Policy at IPSE. 

As delighted as we are with the news, we remain concerned that the underlying IR35 rules will stay in place, and we hope to work with the government to make further progress on this issue in the weeks and months ahead.

“But for now, this is a watershed moment and will be a tremendous boost to thousands of contractors who have been unfairly penalised by these damaging rules.

Andy Chamberlain, Director of Policy at IPSE.

The announcement that the 2017 and 2021 reforms are to be repealed means that from 6 April 2023, contractors will once again be responsible for assessing the tax status of their engagements, as was the case pre-reform. However, with this responsibility also comes the associated tax liability if HMRC disagrees with an engagement’s status.


Dave Chaplin, CEO of tax compliance firm IR35 Shield, and an avid speaker and adviser on Off-Payroll legislation, reminds readers that The Stop The Off-payroll Campaign he personally ran for four years “spelt out the punitive effect that the legislation would have and it came to pass.”

My final word to the government on the matter is ‘I told you so – and finally you listened.

Dave Chaplin, CEO of tax compliance firm IR35 Shield

Chaplin, like many freelancers and founders looking for agile talent, saw the new version of IR35 as a growth stifler. Chaplin has likened it to “pouring glue on the economy” to prevent growth.

But he sees a silver lining now for all the years of campaigning: “The Chancellor has done the right thing and removed an unnecessary burden for firms of trying to solve a complex riddle every time they hire a worker. 

“Today’s bold move by Kwasi Kwarteng may well have given the Conservatives a chance of winning the next general election.”

“Off-payroll has created a car crash”

Crawford Temple, CEO of Professional Passport, an independent assessor of payment intermediary compliance said a lot of people and companies have paid dearly since the government built new legislation on “fundamentally flawed original legislation”, as most experts highlighted at the time. 

Temple is particularly concerned that the legislation opened the floodgates to disguised remuneration schemes that have had a punitive impact on contractors’ pockets whilst the perpetrators of the schemes financially flourish.

“Implementation of these new rules has cost companies millions of pounds so it is disappointing that the warnings were not heeded before pressing ahead.  Implementing Off-payroll has created a car crash and much damage has already been done.”

Temple isn’t perhaps celebrating as others are. He believes the government urgently needs to press HMRC to provide detailed guidance, on the back of today’s announcement, relating to the application of the MSC Legislation.  

“I would go further and suggest a review of both IR35 and MSC Legislation needs to be carried out urgently so that contractors are not inadvertently operating under schemes that would apply full PAYE to their income from April.  IR35 is flawed and the government should start with a clean sheet of paper and design a strategy for the modern workplace,” said Temple.

To view the moment when Kwasi Kerteng spoke of the IR35 appeal, check out the video below reposted by Qdos:

  1. Dave son of Dave says

    Nonsense. IR35 has not been repealed.

    What has happened is that the onus for determining IR35 status has been removed from big businesses and put back on the shoulders of freelancers. HMRC can still come knocking for their “deemed” taxes.

    IR35 does need scrapping entirely, but we are not there.

    1. Katherine Steiner-Dicks says


      The article states the reforms were repealed and states that IR35 is not scrapped.

      1. Richard F says

        It’s a good point though that whilst there will probably be more outside IR35 roles again now which is good news – that’s only because firms are risk aversed and couldn’t be bothered to draft contracts and ensure appropriate ways of working – so the bad news is that the whole burden and risk is back on contractors…

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