Compliance & Tax

Key changes outlined in the Autumn Statement reduce IR35 risk for businesses

IR35 updates from the Autumn Statement 2023 | YunoJuno
James Orpin
James Orpin
December 7, 2023
Reading time
3
minutes

This year’s Autumn Statement included a few amendments that contractors, freelancers and businesses that hire self-employed workers should be aware of. The stand-out changes highlighted in this article include a reduction in National Insurance Contributions (NICs) for self-employed workers and yet another amendment to the controversial IR35 ‘off-payroll’ rules.

IR35 offset

The latest changes to IR35 rules will allow HMRC to offset tax and NICs that have already been paid by a contractor’s Personal Services Company (PSC), if the contractor is deemed to be operating inside IR35. Under previous rules the PSC’s contributions weren’t taken into account, which meant that ‘double-taxation’ was likely to occur with both the fee-paying business and the PSC liable to pay the full tax bill.

"Embracing the changes in the off-payroll rules signals a positive shift in mitigating financial risks for businesses. However, it’s crucial to recognise that the true cost extends beyond monetary fines. Reputational damage still persists, as illustrated by high-profile cases this year. While the financial burden may ease, the enduring impact on a company’s image demands continuous vigilance. Addressing complexities in off-payroll rules is a step toward clarity, but preserving reputation remains paramount in navigating these evolving regulatory landscapes."
James Orpin, VP of Contingent Workforce Solutions

Changes to NICs for self-employed workers

While many businesses will be reviewing their policy on engaging with PSCs, the biggest change for self-employed workers was to how contractors and freelancers pay NICs.

Class 2 NICs axed for those with profits above £12,570

Some two million self-employed people with profits above £12,570 will benefit from the axing of Class 2 national insurance. While nobody in this group will be required to make Class 2 payments, they will still receive access to contributory benefits, like the State Pension.

Changes to Class 2 NICs for those with profits below £12,570 

Those with profits between £6,725 and £12,570 won’t have to contribute but will receive a National Insurance credit, and those with profits below this will continue to be able to make voluntary contributions in order to receive the benefits. 

1% reduction in Class 4 NICs

Chancellor Jeremy Hunt also announced a cut to class 4 national insurance from 9% to 8%, which he said will result in an average saving of around £350 a year. Both of these changes will take effect from 6 April 2024.

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Find out more about IR35 compliance with YunoJuno.
Find out more about IR35 compliance with YunoJuno.

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