UK: IR35 Tax Reforms postponed due to Coronavirus

The government  has announced that the reforms to the IR35 tax rules will be postponed until April 2021 in an attempt to alleviate pressure on businesses and individuals as a result of the Covid-19 pandemic.

The reforms are designed to tackle non-compliance with existing off-payroll working rules by shifting the responsibility for determining the tax status of contractors to medium and large organisations in the private sector who are using their services.

The delay to the reforms was announced by Chief Secretary to the Treasury Steve Barclay on 17 March 2020, and comes shortly after the UK government confirmed it was to push ahead with the reforms. Instead, the measures are now planned to come into force on 6 April next year.

Steve Barclay said the move is part of the broad package of measures the Treasury has announced to help protect the economy from the coronavirus outbreak. He explained that the decision was “a deferral, 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 tax as those employed directly.

Practical point

Businesses and contractors will welcome the delay to the reforms while they focus on managing the impact of Covid-19.