Over a third of businesses unprepared for IR35 tax reforms

Some 38% of mid-sized businesses are not ready for the transition to the IR35 tax reforms, according to a study conducted by Grant Thornton.

The changes to off-payroll workers rules are set to take place in less than three weeks, with a deadline of 6 April.

However, Grant Thornton’s study of 605 mid-sized businesses across the UK found that 13% of businesses had done only minimal preparation for the changes, while a further 25% had their preparations underway but were still not ready for the deadline.

Moreover, under six in ten (59%) respondents claimed that they were ready for the upcoming changes.

The changes will impact businesses through increased liability for PAYE and NI contributions for contractors within scope of the updated IR35. 

Bethan Gill, associate director for people advisory at Grant Thornton, said that now is the time for businesses to take action so as to “ensure that they have considered their position and properly assessed” the impacts of the new rules.

She added: “Although it presents an immediate compliance burden for many, the preparation for IR35 also offers an opportunity for organisations to review their wider resourcing strategy to find the most effective and efficient way to create value from their people.

“Our research found that the preparation process for IR35 had provided many businesses with the opportunity to reassess their wider people strategy.”