IR35 Breaking News: Government announces 12-month delay

In light of the current uncertainty surrounding the recent COVID-19 outbreak, the Government announced yesterday that it will be postponing the implementation of its controversial IR35 legislation for 12-months. Despite this decision being made under such tragic circumstances, it will no doubt come as a relief to the contractors and clients who have previously expressed their concerns over the reforms.

“This is a deferral and not a cancellation, and the Government remains committed to reintroducing this policy in April 2021 to ensure people working like employees but through their own limited company pay broadly the same amount of tax as those employed directly” announced Steve Barclay MP, the Chief Secretary to the Treasury last night at the House of Commons.

What does this mean for employers and contractors?

With the economic challenges being faced by the UK during this COVID-19 pandemic, businesses and contractors alike will already be faced with the stress of potential income loss through loss of work and custom. It’s considerate of the government to not add to this stress by rolling out tax changes that could further endanger UK businesses and the livelihoods of thousands of contractors at an already unpredictable time.

As well as reducing any additional stress that they might have experienced during this pandemic, the delay also means that the responsibility of determining tax status will remain with the contractor for now. This should help to reduce blanket IR35 decisions being made by employers and help contractors keep their salaries and workload intact.

It will also provide businesses and contractors working within the private sector more time to get clued up and make necessary preparations for the reform when it arrives next year. This is something that they might not have been able to do, had the reform happened in April 2020 as planned.

Vantage Consulting’s MD, Russell Jones said “All of us at Vantage are thrilled to hear that the IR35 tax reforms are going to be delayed for another year. This will hopefully give contractors and businesses the breathing space they need to make it through these uncertain economic times. We also hope that it will also bring some peace of mind to the contracting community during this pandemic- who are understandably concerned about their future employment opportunities going forward.”

At Vantage, we’re committed to helping our contractors and clients through these uncertain times. If we can help, or you have any concerns or queries, please get in touch.

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Russell Jones

18th March

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