IR35 reforms postponed

Speaking in Parliament on Tuesday, Chief Secretary to the Treasury Steve Barclay announced, “The government is postponing the reforms to the off-payroll working rules, IR35, from 6 April 2020 to 6 April 2021.”

The suspension comes in response to the ongoing spread of COVID-19 to help businesses and individuals, Mr Barclay confirmed, adding that “this is a deferral, not a cancellation”.

The move is a part of the Chancellor’s announced coronavirus response package, aimed to help businesses deal with the economic repercussions of the pandemic. 

Off-payroll working rules, known as IR35, were introduced in 2000 to ensure that someone working like an employee, but through their own limited company, pays broadly the same tax as someone employed directly. 

The reforms, announced in the 2018 Budget, make medium and large organisations in the private and third sectors responsible for determining the tax status of contractors and ensuring that the right employment taxes are paid.

The reforms have previously been implemented in the public sector.

The government said on Wednesday it continues to believe that it is right to address the fundamental unfairness of non-compliance with the existing off-payroll working rules, however it admitted that the reforms would be a significant change for both businesses and contractors. Delaying means changes will not need to be implemented until next year.