End of IR35 reforms: Welcome news or another nightmare?

Last Friday 23rd September, Chancellor Kwasi Kwarteng announced the change in responsibility for determining worker status under IR35 legislation.

 “Here we go again…,” I thought.

Although 2017 seems like an age ago, I remember communicating with an 1800-strong public sector workforce about the then change in the IR35 rules. To say this was a sizable task is an understatement. HMRC left everything to the last minute and there was no CEST tool available to make determinations. Confusion, anger, fear and anxiety swept across the workforce – and with little to no information accessible to the Local Authority sector, stress levels were at an all-time high.

The resulting changes meant that the typical agency social worker role fell inside of IR35 and thus, the end client became responsible for ensuring compliance. As a result, we saw a seismic shift in employment status with around 15% taking on permanent roles and 5% moving to agency PAYE. The remaining 80% moved to umbrella payroll.

With this pivot came a decrease in take home pay for Umbrella and PAYE workers, which soon led to payrate inflation. Any savings councils saw in an increased number of perm employees was wiped out by ever increasing agency spend.

So, what’s going to happen in April? Will we see more perm social workers move to agency work? Will agency payrates drop to the level they were before they were increased following the 2017 changes? Will project and managed service teams badged as “outside IR35” disappear? Will Council’s via their contracted agency supply chains still insist on Umbrella status? Will Agency Social Workers again be caught out with huge tax bills because they got their own determination wrong? Will regional memorandums have differing views or join together for a consistent approach?

The one thing that remains certain is that my colleagues and I, along with other established agencies, will work closely with both our loyal agency workforce and our local authority clients to ensure continuity of workers for the children, families and adults in need.

There is certainly lots to navigate over the next few months but this time we are more prepared than ever. Equipped with the knowledge we gained from 2017, we are ready to amplify the voice of the agency social worker, help councils address their workforce challenges and improve overall outcomes for the communities they serve.

We look forward to hearing your views on the reforms to IR35 and would be delighted to raise any concerns, queries or illuminating suggestions with the committees and governing bodies we are in contact with. Please get in touch via phone on 07368601728 or drop me an email at [email protected].

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