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The government has announced its Growth Plan 2022. The key employment-related aspects are: the repeal of IR35 reforms introduced in 2017 and 2021; the removal of the bankers' bonus cap; requirements for trade unions to put pay offers to a member vote and to maintain minimum service levels during strike action; reductions to income tax rates; an increase to the company share option plan limits. The government also reconfirmed plans to reverse a rise in National Insurance contributions and to scrap a planned health and social care levy.
The new conservative government's Growth Plan 2022, announced on 23 September 2022, contains a number of employment law and employment tax measures. Some of the details remain to be confirmed, but what we know so far is as follows, along with our initial thoughts:
Adapting to the IR35 reforms was a significant compliance burden for many organisations. Some may be reluctant to embark on a process of undoing all that work and may, for example, prefer to stick with umbrella company arrangements that were set up in response. However, contractors might now push to return to a classic PSC model, where they are responsible for the tax status determination and the end client is largely protected from the risk of an unexpected income tax bill. There are some benefits to this for end clients as the PSC model can reduce the risks of inadvertent status misclassification from an employment rights perspective, as well as a tax perspective.
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