Contractor community offered some hope by PM candidate, as Truss targets flawed IR35 reform
Liz Truss has broken her silence on IR35 and committed to a review of this controversial tax if she becomes Prime Minister and leader of the Conservative Party next month.
Speaking in an interview with The Sun on Sunday, Truss criticised the reform for “trying to treat the self-employed the same as big business” and promised that, under her leadership, there would be a government review into IR35.
In the interview, she went on to say:
The fact is, if you’re self-employed, you don’t get the same benefits as being in a big company. You don’t get paid holidays, you didn’t get those benefits. So the tax system should reflect that.
Truss continues to target tax cuts in leadership bid
A commitment to reviewing IR35 is a continuation of Mrs Truss’s promises with regard to the tax system.
Truss is competing with ex-Chancellor Rishi Sunak for the position, and both have set out their vision for the future direction of the country.
The Foreign Secretary has promised tax cuts immediately – across National Insurance and Corporation Tax – while Sunak wants to contain inflation before introducing tax breaks.
Sunak has said he will cut Income Tax, but so far has been silent on IR35, which was reformed in the private sector in April 2021 when he was Chancellor of the Exchequer.
A potential review of IR35 will offer some hope to contractors, who together are said to contribute over £300bn to the UK economy each year, but have been hard hit by IR35 reform in both the public and private sectors.
“A step in the right direction”
On the whole, the news has been welcomed by experts in the industry, including Seb Maley of Qdos Contractor, who called it “a step in the right direction”.
However, he did highlight that “we’ve been here before”, referring to an inquiry launched in 2021.
The inquiry followed a parliamentary sub-committee report published in April 2020, which called for “wholesale reform” of IR35 and found the “off-payroll working rules to be riddled with problems, unfairness and unintended consequences” for contractors.
Despite the findings of the previous inquiry and the fact that “IR35 has been reviewed multiple times in recent years,” says Maley, “the government have taken very little or no action whatsoever”.
With this in mind, he went on to say that the review – if it goes ahead – must be “independent and far-reaching”.
Andy Chamberlain of IPSE has also welcomed the news, but he echoed the same concerns as Maley.
“While it is positive to hear Ms Truss acknowledge the need to look again at IR35, we have had reviews before and none of them have led to anything meaningful”.
Chamberlain called for this review to go further than previous inquiries into IR35, calling for “radical and tangible change. Nothing should be off the table, including scrapping this dreadful legislation altogether”.