IR35 changes delayed for a year due to coronavirus

The Government has announced that it will be deferring new rules affecting contractors working for the private sector, directly or through an agency, that were due to come into force from 6th April 2020 until 6th April 2021.

The changes which would have affected all contractors working for medium or larger organisations, had initially been confirmed in The Budget.

However, Steve Barclay, the Chief Secretary to the Treasury, announced the delay for a year as part of the Government’s response to the coronavirus pandemic. He confirmed that the decision was “a deferral, not a cancellation, and the Government remains committed to reintroducing this policy”.

The news has been welcomed by the business community with, John Cullinane, Tax Policy Director at the Chartered Institute of Taxation (CIOT), saying: “We welcome the announcement that the reforms to the off-payroll working rules will be delayed from 6th April 2020 to 6th April 2021.

"We are currently in extraordinary times and many individuals, businesses and employers are already facing significant challenges simply being able to work or to pay the people they employ. These new rules had the potential to significantly impact the labour market, and their deferral is welcome.

What you should do next

The impact of this deferral will depend on your circumstances and actions taken to date by the company or agency you work for, but generally you should consider:

• Reviewing the actions, you have taken and see if these are impacted by the deferral. For example, if you have started an insolvency process on the basis that you no longer need your company you may need to defer this.
• Talking to the organisation you work for to see if the deferral has/will change their approach.
• Reviewing any determinations sent out by your agency or firm in anticipation of the change. The deferral will mean that you will be responsible for determining whether your contract is inside or outside IR35 for a further 12 months.

Most importantly, talking to your accountant. The Government is issuing guidance regularly as it tries to keep pace with the current situation, meaning a review of your own circumstances is more important than ever.

If you would like to discuss how the IR35 changes or the coronavirus pandemic may affect you or your business, please do not hesitate to contact us on 01423 871 870 or use our online enquiry form.

For our latest COVID-19 news and guidance for your business, visit our dedicated Coronavirus Hub.
We will be updating it regularly as we continue to monitor and digest all the latest information.

Date published 18 Mar 2020 | Last updated 25 Sep 2020