Coronavirus: Government announces IR35 delay

The Government made a swift decision yesterday evening to delay the introduction of the new IR35 rules by one year. This positive move helps the economy in these challenging times.

Steve Barclay, Chief Treasury Secretary, confirmed that these measures, intended to address tax avoidance by contractors providing the same service as employees, will now come into effect from 6 April 2021. This measure was expected to increase the revenue intake for the Treasury from 6th April 2020.

It follows significant opposition from business leaders to the announcement in the Budget that the reforms were still set to go ahead next month.

Many organisations have already put in place procedures to deal with the new rules that were due to come in. Businesses and contractors alike should bear in mind that the deferred reforms will be implemented, as it is a deferral and not a cancellation. The Government will reintroduce the policy, to ensure that people who work similarly to employees but through their own company, pay broadly the same tax as employees.

Further information is expected to be published in the coming days regarding the IR35 reform delay, as well as the other measures which are being introduced to support businesses.

Our tax team welcomes this timely measure during this period of uncertainty for businesses. It will help keep the cogs turning for the economy and remove the administrative burden that would have accompanied this change. It is a very positive move as part of the package of measures that the Treasury is introducing to ease the turmoil caused by Coronavirus. Please contact our Tax Partner, Pauline Hudd or our Senior Tax Manager, Prashant Malde if you need any help in this area.

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