Tax rules governing contractors and freelance workers may be due for an overhaul following the general election.
The PCG advised that discussions with the political parties indicate there may be changes to the IR35 regulations.
IR35 was introduced in an attempt to eliminate the avoidance of tax and National Insurance Contributions (NICs) through the use of intermediaries, such as a personal service company (a one-man limited company) or partnerships, in circumstances where an individual worker would otherwise:
- for tax purposes, be regarded as an employee of the client; and
- for NICs purposes, be regarded as employed in employed earner’s employment by the client.
Since its inception IR35 have caused huge problems for freelancers and companies who use their service, and the system needs to be made fairer and clearer.
In its statement, the PCG said: "[We have] had a series of meetings with various political parties and have found these discussions both fruitful and productive. We detect from all political sides a desire for a revision of IR35 legislation.
