UK to repeal non-payroll work rules (Ir35) | Morgana Lewis

The UK government’s ‘growth plan’ (or ‘mini-budget’) presented on September 23 announced that recent changes to the UK’s non-payroll working rules will be repealed with effect from April 2023 .

This will remove a significant compliance burden for public sector bodies and some private businesses who currently need to determine whether people who provide services personally through intermediaries (such as personal service companies) are – if the presence of the middleman is ignored – in essence employees.

The current rules impose a significant compliance burden on the organizations and companies concerned. This includes the requirement to provide “status determination statements” of employment backed by reasoning, which can be an onerous requirement, given the complexity of determining the correct employment status of workers. Where applicable, the rules also require the withholding transaction (PAYE) to ensure the correct amount of income tax and National Insurance (NIC) contributions are paid.

The proposed changes will remove the requirement for public sector bodies and private companies to determine whether the rules apply, returning to the pre-2017 position where the intermediary is responsible for applying the rules and accounting for any income tax and NICs under PAID. This should result in a significant simplification of payroll compliance obligations across the workforce supply chain for affected organizations and businesses.

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