IR35 reforms delayed by a year

Changes to IR35 have been delayed for a year while the UK tries to get to grips with the impact Coronavirus is having.

The reforms were due to come into effect from 6 April 2020 and would have seen the responsibility for determining the employment status of a worker taken from contractors and passed onto clients instead.

Chief treasury secretary, Steve Barclay has however announced that this will now be pushed back by a year to 6 April 2021.

Barclay says that the move is part of a broad package of measures the Treasury has announced to protect the economy from the Coronavirus outbreak. He also confirmed that the decision is a deferral, not a cancellation, and the government remains committed to reintroducing this policy next year.

Speaking about the delay, IR35 expert Qdos boss Seb Maley commented:

“It does 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.”

While this may be welcome news for the vast majority of businesses, some have already laid off contractors and abandoned projects in anticipation of the changes.

John Chaplin, EY people advisory partner, also said that the vast majority of businesses have already completed the work ahead of the IR35 changes and may have offered permanent positions to some workers.

He commented:

“It remains to be seen what those businesses will do now, but I doubt they will all reverse the work of the last several months only to then go through the process again in the lead up to the deferred implementation date of April 2021.”

If you would like further information about IR35 or if you had already started preparing and need some advice about what to do now, please email our Accounts, Tax & Payroll Manager, Peter Bowyer, who will be more than happy to help.

If you’re concerned about the impact that Coronavirus could have on your business, please give us a call and visit our website for the latest COVID-19 updates.