A plan to repeal working rules that that impact numerous oil and gas workers has been scrapped by the new chancellor Jeremy Hunt.
Kwasi Kwarteng said undoing tax changes that were implemented in 2017 and 2021 would “free up time and money” by making it simpler for businesses to engage contractors.
However, yesterday Mr Hunt confirmed that the IR35 reforms would remain in place.
Keeping the rules will save the government £2 billion a year, the Treasury said.
The Times said the reforms had aimed to tackle disguised employment, when contractors choose to work for companies off payroll, often through personal service companies, which arrange for them to pay less tax and national insurance.
Groan from energy sector
Mr Hunt’s decision not to follow through with the move to scrap IR35 reforms will have incited a huge groan from oil and gas firms, according to Energy Voice.
Research has previously shown the current intricacies of the rules are putting businesses off using contractors.
Qdos chief executive Seb Maley told the publication: “I’m lost for words. The chaos, uncertainty and disruption caused by the mini-Budget is unprecedented. While U-turning on some tax cuts made sense, cancelling the repeal of IR35 reform is the wrong decision at the wrong time. It’s a knee-jerk reaction from the government and, in my opinion, won’t benefit the economy.
“IR35 reform damages the flexibility of the UK labour market, which is key to economic growth. Many contractors left the sector after risk-averse businesses stopped engaging them. Repealing reform would have opened the floodgates – a catalyst for the recovery of this sector."