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IR35 reforms delayed until 2021

  • 20th March 2020

On Tuesday, it was announced that the private sector reforms to IR35 (off-payroll working) will be deferred by one year to April 2021.

The reforms, which were due to take effect from 6 April 2020, will see medium and large private private sector businesses in the UK become responsible for setting the tax status of any contract worker they use.

These changes are being made to ensure that such workers pay roughly the same amount of tax as normal employees.

However, the government has acknowledged that now would not be the time to introduce these changes, with many individuals and businesses likely to face financial hardships in the coming months as a result of the COVID-19 crisis.

Stephen Barclay, Chief Secretary to the Treasury, was keen to stress that this is “a deferral not a cancellation and the government remains committed to reintroducing this policy.”

So, while affected businesses should be aware that the changes will come into effect in 2021, they don’t need to perform employment status determinations and payroll deductions until next year.

Until then, the risk of non-compliance under IR35 remains with any Personal Service Companies and workers that businesses engage with, not with the business themselves.

The provisional date for the IR35 changes to come into effect is now 21 April 2021.

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Any news or resources within this section should not be relied upon with regards to figures or data referred to as legislative and policy changes may have occurred.