The off-payroll working rules will remain in place as virtually everything in Kwasi Kwarten’s September Budget has been scrapped by new chancellor, Jermey Hunt

In short, this means end users in the public sector and large and medium sized end users in the private sector will continue to be obliged to apply IR35 to any contractors providing their labour via their own intermediary, such as a personal services company or partnership (“PSC”).

IR35 is designed to combat “disguised employment” so applies when the contractor would be an employee if they were hired directly by the end-user. If IR35 applies, PAYE and NICs must be operated in respect of the fees paid to the PSC.

Under the original IR35 rules, the contractor was responsible for assessing whether IR35 applied and, if so, operating PAYE/NICs.

The rules were changed for large and medium-sized private sector businesses from April 2021. Under those changes, the responsibility for assessing whether IR35 applies moved from the contractor to the end-user. If the end-user determined that IR35 applies, the responsibility for operating PAYE and NICs moved from the PSC to the “fee payer” – that is, generally the entity which contracts directly with and pays the PSC.

In September, then Chancellor Kwasi Kwarteng proposed that, with effect from 6 April 2023 these changes would be reversed. Irrespective of whether the contractor was working in the private or public sector, the contractor would once again be responsible for determining their own employment status and paying the appropriate amount of tax and NICs under IR35.

Mr Hunt has now confirmed that this change will not take effect and the status quo will continue after April 2023.