Employer/Employee Taxation Changes
Alan Kitto
At the end of September 2022 the Chancellor of the Exchequer announced a number of taxation changes that relate to employment:
The cancelling of the Health and Social Care Levy of 1.25% which was to be introduced from April 2023
The ending of the 1.25% uplift in National Insurance Contributions (introduced in April 2022) from 6th November 2022
A 1% reduction in the basis rate of tax (from 20% to 19%) brought forward to April 2023
One point that wasn’t picked up widely by the press though was the repeal of reforms to the Off-Payroll Working (OPW) rules introduced in the public sector in 2017 and extended to medium and large-sized organisations in the private and voluntary sectors in 2021 (often referred to as IR35)
From April 2023 workers providing their services via an intermediary will once again responsible for determining their employment status and paying the correct amount of tax and National Insurance contributions from 6 April 2023. This will remove a lot of the risk to the engaging company when appointing contractors who either have a personal services company or else work through an umbrella company.
This change does not impact on the need for employers to still ensure self-employed contractors meet the HMRC and legal tests to be self-employed contractors and not workers or employees.
If you have any questions on this or any other HR matter, please get in touch.