The new IR35 rules are designed to address perceived tax abuses associated with off-payroll working. They apply to contractors as individuals who operate through their own personal services company.
Chief secretary to the Treasury Steve Barclay told the House of Commons last night: “I can also announce that the government are postponing the reforms to the off-payroll working rules IR35 from April 2020 to 6th April 2021.”
He added: “This is a deferral in response to the ongoing spread of covid-19 to help businesses and individuals. This is a deferral, not a cancellation, and the government remain committed to reintroducing this policy to ensure that people who are working like employees, but through their own limited company, pay broadly the same tax as those employed directly.”
Tax consultant Qdos praised the government for making the ‘right call’ at a time of crisis. CEO Seb Maley said: “The government has seen sense and made the right call in these unique circumstances. Given the economic challenges that lie ahead of the UK, now certainly would not have been the right time to roll out needless tax changes that endanger hundreds of thousands of contractors’ livelihoods.
“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.”
Chancellor Rishi Sunak also announced a £330bn package of guarantees, including increasing the amount that businesses can borrow through the Coronavirus Business Interruption Loan Scheme from £1.2m to £5m, and ensuring businesses can access the first six months of that finance interest free.
“We will do whatever it takes to protect our people and businesses from the effects of this global economic emergency brought on by the Coronavirus pandemic,” the chancellor said.