About damn time, luckily i've not been a contractor for some years now and have missed the IR35 shitshow of recent years. Having a client offering a contract having to determine if my company is an actual business or i'm just a disguised employee is a ridiculous way of doing it. Sorry but when i was contracting i was also taking on other freelance work, had long standing retainers for maintance for past clients and having junior developers working in my company doing the grunt work, thats a business, i'm not a disguised employee.

The responsiblity should be on the person to argue with HMRC that they are a business and for those legitimately operating as such, then its not at all difficult.

It's messed up that the UK has such differential tax rates between employment and self employment that this matters at all.

Note that the liability is shifting back to contractors.

I don’t consider this a win for the contractor. The end client should be the one to determine status and shoulder the responsibility if it turns out to be incorrect.

Can we get a better headline?

I have been outside the UK for more than 8 years but I still get approached by UK recruiters offering contracting gigs. 7 out of 10 of them always write "Outside IR35" and I never really grasped what it meant exactly, can any UK contractors ELI5?

This is good news, it's poorly defined, badly thought out, keep failing even in english courts) and unfairly (and unproductively) stops people from earning more and taking more risk.

Note to mods: The current headline ("IR35 will be repealed from April") is wildly misleading and potentially dangerous.

The underlying IR35 rules don't appear to be changing. The announcement today is about winding back some relatively recent reforms about who is responsible for determining whether those rules apply to any given contract.

IR35 is not being repealed, only the 2017 amendments (which required Public Sector buyers to make an assessment) and the 2019 amendments (which required Private Sector buyers to make an assessment). Prior to 2017, the onus was fully on the Seller and presumably we revert back to that status. This is in line with the Truss/Kwarteng "cutting red tape" and "personal responsibility" philosophy.

All along, IR35's problem has been the difficulty of codifying what is politically determined as a "real" business. Attributes like company size, number of clients/customers, ability to choose your own place of work, the degree to which you're under supervision or direction, the length you've been with a sole customer, your contracted right to walk away or to replace yourselv, and so forth are all indicators toward what may politically seen as "not real", but they are not concrete or absolute. All that is happening is that the onus is shifting back to the Seller and the Buyer's may not longer be on the hook quite so much. But some of it will be baked in now - the changes public sector made might live on despite the repeal, since they continue to work toward the political incentive that brought them in.

This is big news for anyone working as an IT contractor in the UK economy after 2023.

Assuming there is still an economy in the UK in 2023 :)

What you see with IR35 and various laws in the US (eg preferential tax treatment for passthrough corporations that produce stuff since the Trump tax cuts) can all be boiled down a complete failure in dividend taxation.

In the US, corporate profits get taxed. You pay a dividend (for the sake of argument; in reality it's a share buyback these days). You then have to pay tax on that dividend. That's dumb and unnecessary.

In the UK as a contractor you pay yourself a low wsage (IIRC ~32K GBP) then a certain amount in dividends because of preferential tax treatment and then you'd try and deduct a bunch of stuff (eg car leases). You might retain profits and then dispose of your business at a preferential tax rate after a few years.

Australia on the other hand is one of the few countries in the world with a simple system of dividend imputation. Say the corporate tax rate is 30% (it was; not sure if it still is). Say you make $1000 in profits and pay 4300 in corporate tax and decide to distribute the remaining $700 as a dividend.

That $700 is what's called fully-franked meaning it comes with $300 in franking credits. When you file your taxes, you get credit for paying $300 in taxes. If your overall tax rate is lower you'll get a refund (essentially). If it's higher, you'll have to pay a little more.

But this way there's almost no difference between paying yourself ordinary income and paying a dividend so a lot of problems just do not exist. There are some differences (eg the Medicare levy and superannuation requirements).

I truly do not understand why the US cannot do this and why the UK spent 20+ years trying to enforce stupid legislation like IR35 rather than simply fixing the dividend system. It's mind-blowing. The solution is so simple.

IR35 enforcement was such a huge waste of money that simply could've been avoided by not caring if someone gets a tax deduction for a car lease.

For those commenting that it doesn't make much sense anymore from the tax perspective, forget the difference between employee and contractor rates. If I would switch to contracting, my earnings would almost double... For instance:

£500/day contracting? Easy. As an employee? Not a chance.

One of the best things about this is the end of the parasitic “IR35 assessment” industry. Companies who ask you 20 questions, the same 20 questions asked for free on the HMRC ruling web site, but charge you for the privelidge.