23rd June 2010

Contractor tax changes planned for summer

Changes to IR35 tax legislation are expected to be made in the coming months, it has emerged.

Many contractors were left disappointed by yesterday's emergency budget, after Chancellor George Osborne made little reference to the controversial tax system.

However, it is thought that a review of the regulations – which currently affect around 1.4 million freelancers – will begin this summer.

Small business minister Mark Prisk commented: "We want to make sure that we could undertake a comprehensive review of small business taxation in a way that makes the need for the current IR35 legislation redundant."

He added that the government wants to ensure that appropriate changes are made, but said IR35 is problematic as it is "a constantly changing set of rules".

The Professional Contractors Group is among the organisations which have been calling for an overhaul of the current taxation system for freelance workers.

"In this Budget the government has set out the big picture; now they can start colouring in the details," the group commented.

Tina Riches, a director at the Chartered Institute of Taxation, also welcomed the proposed review, noting that small business tax was currently played on "a very uneven pitch".