Originally written by Timothy Adler on Small Business
Chancellor Rishi Sunak says the taxman will not be “heavy handed” when IR35 changes come into effect on 6 April, potentially bringing 230,000 sole traders within PAYE.
Answering questions in Birmingham on Saturday night, the new chancellor sought to reassure both companies and freelance contractors, saying the controversial policy will have a soft landing – at least in year one.
HMRC is keen to bring freelance contractors within PAYE in order to tackle what it calls “disguised employment”. Currently freelance contractors, one-man-band limited companies who work on projects for companies, pay corporation tax at 20 per cent instead of higher PAYE rates, while employers duck national insurance contributions. The Treasury sees both freelancers and employers as gaming the system, as effectively many freelancers are full-time employees. The IR35 reforms are projected to bring in £3bn over the next four years.
>See also: One third of freelancers say IR35 changes affecting mental health, contemplating suicide
However, the IR35 changes have triggered howls of protest, with freelancers complaining that rushed implementation has seen unprepared and panicked employers drop them. Nearly one third of freelancers say they are having mental health issues, and even contemplating suicide, because of the uncertainty.
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