The November Budget announcements suggest that IR35 reform is not scheduled to be introduced in 2018 as many feared it would. However, this does not mean that 2018 still will not be a defining year for changes to tax rules in the private sector.
Rumours will continue to circulate about changes to IR35 until the government confirms or rules out any private sector reforms.
Before the government makes any changes to IR35 rules for the private sector, it must examine the impact of the changes onto the public sector rules. The government has promised that it will do this, but many businesses still fear that the proposed consultation is simply a way of delaying the changes.
The government has also been making tax changes, which have the effect of whittling away the benefits of self-employment without offering any benefits or incentives in return.
A contractor who finds themselves inside IR35 rules must now pay similar taxes to those paid by an employee. This, added to the fact that it is now the client that decides on the employment status, has led some contractors to move away from the public sector, and many contractors are concerned that the same changes will be introduced in the private sector.
The government has committed itself to a review of the complex employment status rules in 2018, and it may introduce a new employment status for the self-employed. However, this assessment may not cover the linking of status and employment rights.
If the government ignores the many voices against the public sector IR35 changes being extended to the private sector, then it should publish a roadmap for the changes to ensure that contractors are prepared.