On 18 March 2020, the UK Government has announced that the proposed updates to the IR35 legislation will be delayed by one year. Chief Secretary to the Treasury Steve Barclay has said: “The government is postponing the reforms to the off-payroll working rules, IR35, from 6 April 2020 to 6 April 2021.”
Deferral in response to Coronavirus (COVID-19)
He went on to say that the deferral has been given in order to help businesses and individuals in response to the impact of the Coronavirus (COVID-19) on contractors.
The Chief Secretary also confirmed that “This is a deferral and 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 broadly the same amount of tax as those employed directly.”
This is a welcome announcement from the government and will provide some measure of financial security in this time of uncertainty, although in many cases it may already be too late for end users to untangle their restructured hiring processes.
An extra year will also provide more time for the government to analyse the impact that the proposed legislation will have on contractors and make some much needed changes.
What this means for you
For now, all parties in a supply chain can use the additional freedom that this provides to focus on dealing with the immediate effects of the Coronavirus (COVID-19).
Atlas is able to align with our clients’ stance on IR35, whether that is to adjust to the delay or carry on with strategies already in place.
For contractors, we have recently updated our contracts for Personal Service Company (PSC) engagements, both Inside and Outside IR35, and these will remain suitable for use going forward.