The news broke as part of a spring update, ‘Tax Update Spring 2025: simplification, administration and reform summary.’ This included other measures aiming to simplify taxation and save taxpayers and businesses time, in turn, supporting economic growth.

Since its introduction in 2017, the CEST tool has been used to help determine the IR35 status and employment status of freelancers, contractors and self-employed workers – which is to assess whether these workers should pay tax as self-employed individuals or as employees. However, it has attracted significant criticism for alleged inaccuracies.

The policy update states: “HMRC is revising its CEST digital tool with effect from 30 April 2025. These changes will make it easier for CEST’s users to use the tool. To support these changes, HMRC will also publish revised guidance that offers help on how to answer the revised questions. HMRC is committed to standing behind the outcomes of this tool where it has been used correctly.”

Commenting on the announcement, Seb Maley, CEO of tax insurance provider and consultancy Qdos, said: “The government is right – the CEST tool needs revising. In its current form, it’s a blunt instrument for determining if an individual is genuinely self-employed or should be paying employment taxes.

“We’ll await the changes, but in the meantime, it’s worth pointing out that users – whether freelancers, contractors or businesses – can and ideally should get a second opinion on answers provided by CEST.”

Maley added: “Changes that help users answer the questions it poses – while welcome – won’t address the elephant in the room, which is that relying solely on CEST to decide employment status still poses a risk.”

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