IR35 rules change delayed

The Chief Secretary of the Treasury, Steve Barclay, made an unexpected announcement to parliament on the night of 17 March 2020. The announcement confirmed that the government are postponing the roll-out of IR35 rules to the private sector that would have affected the tax status of many incorporated contractors across the UK.

This a welcome change as it will defer much disruption in this sector until the worst aspects of the COVID-19 outbreak have passed. The new rules are now delayed and will come into effect from 6 April 2021, a year later than planned.

The Chief Secretary of the Treasury said that:

‘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 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.’

The announcement of these changes will, unfortunately, come too late for some independent contractors whose large company clients may have already made changes in advance of the expected introduction of the new rules. These changes were expected to raise over £1.1bn for the public purse in 2020-21.

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