Great News for Contractors - Government Delays Private Sector IR35 Reforms
Great News for Contractors - Government Delays Private Sector
Lords call to postpone IR35 reform amid Covid-19 fallout
The government has postponed the controversial reforms to the IR35 tax rules until 2021 as it attempts to alleviate pressure on businesses and individuals amid the Covid-19 fallout. Last month the Treasury confirmed it was to push ahead with changes to the rules, which would see every medium and large private sector business in the UK become responsible for setting the tax status of any contract worker they use from April 2020. Previously the rules had only applied to the public sector.
Despite calls for the reforms to be scrapped, the Treasury maintained the changes were necessary to address the "fundamental unfairness" surrounding non-compliance with the current IR35 rules. But in an unexpected announcement to the House of Commons last night, Steve Barclay, the chief secretary to the Treasury, confirmed the reforms would now be postponed until April 2021.
The MP for North East Cambridgeshire was, however, keen to emphasize the move was merely a delay and not a cancellation of the reforms. Mr. Barclay said: "I can also this evening announce the government is postponing the reforms to the off-payroll working rules, IR35, from April 2020 to April 6, 2021. "This is a deferral in response to the ongoing spread of Covid-19 to help businesses and individuals.
"This is a deferral, not a cancellation and the government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company pay the same tax as those employed directly."
It follows calls from members of the House of Lords earlier this week which urged for the IR35 tax rules to be postponed in light of the coronavirus fallout and its economic impact. Lord Forsyth of Drumlean warned to push forward with the changes in the current landscape would be "perverse" and instead suggested a delay period of six or 12 months.