HM Treasury Delays IR35 Reforms to Private Sector by 12 months
At Budget 2020 last week the Chancellor confirmed that the extension of IR35 reforms to the private sector would go ahead as planned but delayed for 12 months. The latest announcement means the Finance Bill legislation will be delayed by a year and amended to show the new start date of 6 April 2021, and fresh legislation will be brought by then.
These reforms, which were introduced in the public sector in 2017, pass the responsibility for determining a contractor’s status from the individual to the organisation which employs their services. Their extension to the private sector has proved to be controversial, with claims that the rules are too complex and that HMRC’s online tool check employment status for tax (CEST) used to determine whether or not they apply to contractors is not robust enough to provide a certain or accurate outcome and is therefore flawed.
Steve Barclay, Chief Secretary to the Treasury said:
‘This is a deferral in response to the ongoing spread of coronavirus to help businesses and individuals affected.
‘This is a deferral, not a cancellation. The government remains committed to re-introducing this policy reforms to ensure that people working like employees but through their own limited company pay broadly the same tax as those employed directly.’
The Lawson-West view:
‘The delay is welcome news indeed, particularly to the self-employed during the COVID-19 crisis for it will reduce the strain and income loss for self-employed businesses who are already concerned about the financial implications of the current virus situation.’
If you would like to discuss your employment status as a contractor, or you are a business reviewing the status of sub-contractors and would like more help of advice about ir IR35 changes, please get in touch.
Vaishali Thakerar, Associate Director and Head of Employment Team, Leicester