Autumn Statement 2023 – CIS and IR35 updates
Following the Chancellor’s Autumn Statement announced on 22 November, we have highlighted some of the more prominent points:
National Insurance Contributions
- From 6 January 2024, the main rate of employee’s Class 1 National Insurance Contributions (NIC) will be reduced from 12% to 10%.
- From 6 April 2024, self-employed individuals with profits above £12,570 will no longer be required to pay Class 2 NIC and these individuals will continue to receive access to contributory benefits such as the State Pension. For those with profits between £6,725 and £12,570, they will continue to receive access to a National Insurance credit as they do currently. For those individuals with profits under £6,725, and others who pay voluntary Class 2 NIC to gain access to contributory benefits, will also continue to do so.
- From 6 April 2024, the main rate of Class 4 NIC will reduce from 9% to 8%.
National Living Wage
- From 1 April 2024, the National Living Wage for workers aged 21 and over will be £11.44
Construction Industry Scheme
All from 6 April 2024
- VAT compliance obligations will be added to the Gross Payment Status (GPS) compliance test for the Construction Industry Scheme (CIS).
- VAT, Income Tax Self-Assessment, Corporation Tax Self-Assessment, PAYE tax and CIS tax will be added to the taxes where HMRC is able to immediately cancel a subcontractor’s GPS where it has reasonable grounds to suspect that the subcontractor has fraudulently provided an incorrect return or information.
- New regulations will be introduced to remove from the scope of CIS most payments that a landlord makes to tenants.
- Applications for CIS registrations will be digitalised, apart from those who are digitally exempt.
- HMRC will bring forward the first review of a GPS subcontractor’s compliance check from 12 months to 6 months, reverting to the standard 12-month period thereafter.
The Government will continue to monitor the administration of CIS and areas where simplification and digitalisation may look to improve the processes.
This will include:
- Reviewing and providing guidance and/or updates on uncertain areas on what does or does not fall within the scope of the scheme.
- Reviewing its current guidance on deemed contractor rules to consider whether the guidance needs updating.
- Looking at whether the processes of submitting nil returns can be simplified.
- Considering if other processes can be digitalised.
Off-Payroll Working (IR35): Calculation of PAYE liability in cases of non-compliance.
The current legislation does not allow HMRC to set off amounts of tax and NIC already paid by a worker and their intermediary against the PAYE liability of the deemed employer.
From 6 April 2024, regulations will be introduced that allow the potential for the offset of tax and NIC already paid by a worker/intermediary where HMRC identify an error in the operation of the off-payroll working rules in respect of the deemed direct payment.
- Where the deemed employer of a worker who provided their services through their own intermediary would be liable to operate PAYE in respect of the engagement, and an amount of income tax or corporation tax is estimated to have already been paid or assessed in respect of the engagement, the amount will be treated as having been recovered from the worker/intermediary, and that amount will not be recoverable from the deemed employer.
- The amount treated as having been recovered will be the best estimate that can be reasonably made by an HMRC officer regarding the income tax or corporation tax already paid or assessed.
- Provisions will be made to prevent an individual making a claim for repayment of or claim for relief in respect of deducting or setting off the amount treated as having been recovered.
- The provisions will be in respect of deemed direct payments made or after 6 April 2017.
If you would like to raise anything we’ve discussed in this article, please contact us at [email protected] and talk to our expert team. We’re here to help.
How can The Guild help?
The Guild has in-house ex-HMRC Employer Compliance and CIS experts who can help you with an HMRC enquiry, whether at the outset of the review or at a point where HMRC demands are escalating.
The content of this article is for guidance only and shall not constitute advice. Please seek independent advice or contact The Guild for information about its services.
You might also be interested in
As a highly-respected sub-contractor and intermediary in the contractual chain, The Guild strategically places itself between its clients and sub-contractors.