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Home Technology IR35 legislation repealed: what effects will this have on IT contractors in 2023?

IR35 legislation repealed: what effects will this have on IT contractors in 2023?

by Jessica Weisman-Pitts
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iStock 1279991377

Madeline Paddock, Digital Marketing Executive for ITR Partners.

An announcement from the Chancellor was made last week, addressing that IR35 legislationwill be officially repealed as of April 2023. This news has been welcomed with open arms by contractors, businesses and employment agencies that frequentlywork with contractors.

Under existing rules, the end client or business, as well as the recruitment agency, is responsible for confirming the working relationship of a contractor’s employment – whether they sit inside of IR35 or outside of IR35. However, these rules have been criticised over time due to many contractors being harshly disadvantaged by the knock-on effects of these tax laws.

At ITR Partners, we have had our fair share of experience with the costly IR35 legislation that was changed back in April 2021, and thanks to the new legislation that will be brought back in April, contractors will yet again be responsible for the determination of their employment status andpaying their own tax. Businesses will no longer be burdened with the risks that come with contract work and as a result, will no doubt be filled with more confidence when hiring contractors.

This ideology was confirmed by Greg Evans, Director at ITR Partners:

“The changes to IR35 are very much welcomed. The uncertainty and concern around defining the status has in some cases meant clients are reluctant to consider contractors as they previously would. This in turn has meant for some client’s, projects need to be delayed while they train new permanent staff into roles that would have previously been perfect for contractors to deliver. I am confident this will drive more choice and flexibility into growing companies and stimulate the recruitment market.”

Contract work is used widely in the IT industry, thanks to the ‘quick-fix’ nature of contractors, but also due to their high level of IT knowledge and skill, with a fast turnaround. It is likely that we will see a surge in contract work across the IT industry as we enter Q4 – one of the busiest times of the year for many industries, and we predict to see more consistency with IT day rates as there is less room for error. This is the first step in simplifying the UK tax system.

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