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New statutory changes are just a ‘tidying-up exercise’

The new statutory changes to the disguised employment rules have been categorised as nothing more serious than a ‘tidying-up exercise’ by accountancy experts.

There’s no reason to reach for the pint glass with a shaky hand in the small hours of the morning in fear at the new IR35 changes coming in the Finance Bill 2013, experts say. This is because the recent Treasury-published update is keyed towards eliminating the ability of office holders to avoid taxation by using a personal service company – something that has been very much on the mind of the Government this past year.

Office holders that are paid as contractors through their own third party company (oftentimes owned by the office holder) will now have to make sure they comply with IR35 rules. Likewise will disguised employment tests need to be passed by any third party that holds the office directly.

This simple change was made in order to equalise the way office holders are treated under tax law, especially when they are engaged through personal service companies and other related third parties. This is important because firms using contractors are not required to pay the same amount of National Insurance as they would if they hired a permanent employee.

This means that regular, workaday contractors and freelancers are in no danger of being impacted by these new changes. In fact, if you are not in danger of being classified under IR35 right now you are still safe, as the only noteworthy change to the legislation is to add this extra measure of enforcement regarding office holders working in concert with third parties.

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