The Chancellor’s announced changes to the tax status of self-employed people working for larger companies in the Budget.
IR35 is designed to stop people disguising employment via personal service companies.
Philip Hammond said private firms with over 250 employees will be responsible for checking contractors’ status and could be hit with fines if they get it wrong.
Angela James, director of contractor wealth & senior adviser at CMME, said: “The extension of public sector IR35 reforms to the private sector is disappointing at best. As we move into an uncertain Brexit Britain, enterprise is more integral than ever to our economic growth. Although this is applied only to medium and large businesses at present, my concern is that increasing tax liabilities may spark a trend of the self-employed ditching their limited companies for umbrella ones, where all income will be PAYE. This disincentivises a fast-growing, entrepreneurial section of the economy.
“Our one saving grace is that this won’t be enforced until April 2020, which buys the contractor & independent professional community some time to seek quality advice and make other arrangements – for example, shifting from multiple to singular contract work. In the meantime, we can only hope that contractors maintain their entrepreneurial spirit and enjoy the other perks that come with freelance and self-employed work.”