We’re about 3 weeks into Liz Truss’ new government and boy is she coming out of the starting gates bold.
On Friday 23rd September 2022, the new Chancellor Kwasi Kwarteng announced his “mini budget”.
Amongst a raft of new economic measures, there were the big headline changes that have caught everybody’s attention: a reversal of the 1.25% increase in National Insurance from 6th November 2022, the cutting of the basic income tax rates from 20% to 19% and the scrapping of the additional rate of income tax from April 2023.
But there were also a couple of other really important changes that have flown under the radar slightly. These could have massive implications for employers and I think you should be aware of them so let’s take a look.
Say goodbye to IR35
Whilst Liz Truss had previously said she would “review” the IR35 off-payroll working rules if she became Prime Minister, in a move not many saw coming quite so quickly, Kwasi Kwarteng announced that the reforms made to the off payroll working rules will be repealed from April 2023.
Whilst IR35 is a complex area (and a bit of a nightmare for employers) effectively this means that the burden will shift back to those workers who provide their services to an end client through an intermediary. We’re going back to the position before 2021, just as we have all got our head around what we needed to do – typical!
It will be up to the worker themselves to determine their own employment status and then pay the appropriate amount of tax and National Insurance Contributions.
Prepare for changes to the laws on industrial action
Following a summer of high profile strikes across the country, the Chancellor used his “mini budget” to announce the government’s plans to introduce legislation designed to reduce strike action.
These measures include requiring striking workers to provide a “minimum service level” in critical areas like transport and introducing a requirement for unions to take all pay offers to a member vote.
The government have given no indication of when the changes to the industrial action laws are due to take effect but given the frequency of strikes that we’re seeing at the minute, it’s likely that the government will want to introduce the changes sooner rather than later, so keep your eyes peeled.
Keep a lookout for the loss of retained EU Laws
Separately from the “mini-budget”, the government published last week (22nd September 2022) its Retained EU Law (Revocation and Reform) Bill.
Following the UK leaving the EU, we kept most of the EU laws we all know and love.. If passed, this new bill will repeal all EU laws that remain in place by 31st December 2023.
Don’t panic – before then, the government intends to review key EU provisions to decide whether we should keep them or not. If they want to keep them, they will have to legislate on that area specifically. So, they may take this opportunity to review some key areas – I am thinking holiday pay here!
So, we may lose certain laws, others may be changed – could be big news on the horizon. For now, things stay as they are and we will of course update you if there any changes come up.
All in all, the government’s intention is clearly to grow the economy and these recent announcements have come about with that in mind. Given the current commentary that’s coming from economists following the announced measures, this could be a big gamble for a new government and we’ll all have to wait and see if it pays off.