Chief Treasure Secretary Steve Barclay has announced that the planned IR35 tax reforms will be pushed back a year due to the ongoing coronavirus outbreak.
The controversial legislation allows HMRC to collect additional tax payment where a contractor is an employee in all but name.
Barclay confirmed that the tax reforms will clamp down on tax avoidance, by targeting contractors for companies who are, in practice, providing the same service as employees, would not go ahead in April as previously expected – as announced in last week’s Budget. This will now take place on April 6 2021.
He said that the decision was “a deferral, not a cancellation, and the government remains committed to reintroducing this policy”.
Barclay continued: “That said, this is only a delay, albeit a very welcome one. It does, however, give private sector firms vital time to prepare for reform, which can only be a good thing for contractors. What matters now is that businesses use this time wisely.”
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Ged Mason, CEO of the Morson Group
The Treasury’s decision to delay the introduction of IR35 reforms comes at a poignant time for UK industry and will see many businesses which rely on flexible talent and contractor populations take a sigh of relief. Along with other industry leaders, we’ve been actively lobbying MPs and Government bodies to ensure the reforms don’t inhibit flexible working, which is a major contributor to the economy. This delay is therefore a sensible move and shows the Government’s backing for UK enterprise by taking the necessary steps to protect businesses and the contingent workforces that they are often so reliant on.
As a strategic talent partner that operates as an extension of our clients’ operations, we’ve been heavily focused over the last 12 months on supporting our customers as they make the necessary preparations ahead of the April 6th 2020 deadline. This very same partnership-led approach will continue as we work together with our clients and candidates over the coming days, weeks and months as they restructure their IR35 plans, whilst remaining on-hand to support and guide other organisations who are unsure of the next steps and the impact that this decision – and the wider effect of COVID-19 – will have on the availability of talent.
However, this is very much a delay and not a cancellation, with the IR35 reforms in the private sector still due to come into force April 2021. This 12-month extension will ensure that organisations now have a major head start on successfully meeting the new 2021 deadline.
This truly is a time for us all to come together to show strength and support for one another. We’ve been a leading authority and provider of talent solutions for more than half a century and we will continue to work hand-in-hand with our clients and candidates to provide consistency, flexibility and an expert-led approach that right now is so vitally needed.
IPSE: Government has “done the sensible thing” by delaying IR35
The government has “done the sensible thing” by delaying the changes to IR35 in the private sector, IPSE (the Association of Independent Professionals and the Self-Employed) has said.
Speaking in the House of Commons today, HM Treasury Minister announced that given the circumstances and Coronavirus pandemic, HMRC would delay the roll-out of the changes to IR35 in the private sector for a year.
Andy Chamberlain, Director of Policy at IPSE (the Association of Independent Professionals and the Self-Employed) said: “The government has done the sensible thing by delaying the changes to IR35 in the private sector.
“These changes have already undermined the incomes of many self-employed businesses across the UK. However, they would have done even more serious damage if they had gone ahead as planned.
“It is right and responsible to delay the changes to IR35 for at least a year during the Coronavirus crisis, to reduce the strain and income loss for self-employed businesses.
“This is a sensible step to limit the damage to self-employed businesses in this grave and unprecedented situation, but we also urge the government to do more. It must create an emergency Income Protection Fund to keep the UK’s crucial self-employed businesses afloat.”