From April 2020 the IR35 system will be extended to cover businesses using contractors and freelance staff in the private sector. A move which is expected to net the treasury an additional £1bn in tax in its first year.
With IR35 a long running bone of contention anyway, there is a great deal of concern amongst business organisations and accounting experts that the move will put a ‘significant burden’ on large and medium-sized companies who will have to review all their contracts with freelance staff and determine whether they should be taxed under IR35 rules.
Businesses in the construction and manufacturing sectors are among those most likely to be impacted by what many are claiming will be one of the most significant changes to the operation of employment taxes for many years.