Your Essential Guide to IR35 Changes and How to Ensure Compliance

A summary of key changes as outlined in the UK's Autumn Statement 2023.

June 19, 2024

The UK's Autumn Statement 2023, presented by Chancellor Jeremy Hunt, outlines key changes, including:

  • A reduction in National Insurance Contributions (NICs) from 12% to 10% starting January 6, 2024. This cut applies to both employee and self-employed NICs. 
  • Additionally, the government will make the 'full expensing' capital allowance scheme (100%) permanent for businesses, aiming to boost investment and productivity.

IR35 Off-Payroll Working Rules

The statement addresses concerns related to IR35 Off-Payroll Working Rules. Legislation in the Autumn Finance Bill 2023 will allow HMRC to offset already paid taxes by a contractor's Personal Service Company (PSC) against the deemed employer's PAYE liability if the contractor is later determined as Inside IR35. These changes will be effective from April 6, 2024. This change will significantly reduce the perceived financial impact of misclassification for those operating with a PSC by approximately 70%. 

Tougher Measures Against Tax Avoidance

The Autumn Statement introduces tougher consequences for promoters of tax avoidance schemes, including a new criminal offence and disqualification actions against company directors involved in promoting tax avoidance.

Economic Forecast Revisions

The Office for Budget Responsibility (OBR) revised economic forecasts, noting higher-than-expected resilience in 2023 but downgrading growth expectations for 2024 and 2025 due to forecasted inflation and interest rate increases.

Key Financial Policies

The statement also confirms the permanence of the 'full expensing' capital allowance scheme, extending business rates relief for eligible properties and setting the National Living Wage at £11.44 from April 2024.

Industry Reactions

Reaction from industry leaders suggests a mix of welcome measures, concerns about economic growth, and calls for a more comprehensive industrial strategy. The Autumn Statement is positioned as a pro-business initiative, emphasising private sector responsibility for driving growth.

Worksome's Perspective

Worksome’s Colin McDonagh, Head of Enterprise Workforce Strategy, sees this as a critical opportunity for more risk-averse organisations to open up policy changes towards IR35 in the UK, stating,

“Many corporate UK firms have seen costs increase since 2021, with hardline payroll-only mandates — but this statement gives even the most risk-averse organisation the ability to change policy and engage with independent contractors outside of IR35, with the actual risk sitting around 75% lower than previously.”