Steve Harrhy, Associate Director
After working with several companies to implement robust systems to help them make correct and informed Status Determination Statements, the changes to the off-payroll working rules introduced in 2017 and 2021 are to be repealed.
The following note was outlined by the new chancellor, Kwasi Kwarteng, in the 2022 Growth Plan on Friday.
“3.44 The Growth Plan sets out first steps in taking complexity out of the tax system. The 2017 and 2021 reforms to the off payroll working rules (also known as IR35) will be repealed from 6 April 2023. From this date, workers providing their services via an intermediary will once again be responsible for determining their employment status and paying the appropriate amount of The Growth Plan 2022 23 tax and National Insurance contributions. This will free up time and money for businesses that engage contractors, that could be put towards other priorities. The reform also minimises the risk that genuinely self-employed workers are impacted by the underlying off-payroll rules”.
What does this mean for the market?
On our ATA Recruitment blog, we recently touched on the current skills shortage facing the UK. As it stands, there are currently over 1 million live permanent vacancies across the UK and a substantial number of those are within the engineering and manufacturing sector. Likewise, there has also been a huge decline in the quantity of available contractors since April 2020, this has been down a multitude of factors, including:
Contractors closing their Limited Company businesses and shifting to permanent roles due to the changes in IR35 and the off payroll working rules
COVID-19 causing panic in the contractor marketplace and individuals taking permanent roles as demand for contractors reduced
Skill shortages in engineering roles including Electrical Engineering, Software Engineering and Mechanical Engineering
The change in the off payroll working rules caused companies to reduce or stop using Limited Company contractors as they felt there was too much risk involved in making the correct Status Determinations Statements. This predominately reduced the need for contractors in white collar Engineering roles. With this reversal of the way that contractors are assessed, we are now predicting that we will see the market open up again.
The reason being that from April 2023, Limited Company Contractors will now be responsible for determining their employment status again, in turn increasing the requirement for those in White Collar Engineering roles across the UK. I’m sure that this will encourage those employees with an entrepreneurial spirit to investigate opening a Limited Company and going into contracting.
This is a huge positive for the engineering and manufacturing contracting market. The last couple of years has seen the number of available contractors reduce dramatically, but I’m confident these changes will help open up the engineering market and increase the number of available skilled contractors.
Whatever your view of the recent announcement, there is no denying the contract market is set to become particularly buoyant over the coming months with this change.
Whether you are an employer looking to bridge the skills gap in your business with ATA contractors, an individual interested in becoming a contractor yourself or have some questions regarding the recent announcement, get in touch with our specialist team using the contact form below.
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