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
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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.

AspectEmployeeIndependent Contractor
Control and supervisionDirect control over how, when, and where to workFreedom to set their own schedules and methods
PaymentRegular wages; taxes withheld by employerPaid per project; responsible for their own taxes
BenefitsHealth insurance, retirment plans, paid leaveMust arrange their own benefits
TerminationOften requires notice and may include severanceCan usually be terminated at any time without benefits
Tools and equipmentProvided by the employerTypically use their own tools
"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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"YunoJuno’s IR35 process is a seamless experience and takes a lot of the stress away. The quick payment of freelancers at YunoJuno is a game-changer. We've managed to reduce time to hire from a week to a couple of hours."
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Find out more about IR35 compliance with YunoJuno.
Find out more about IR35 compliance with YunoJuno.

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