Yesterday evening, the government announced that the introduction of the off payroll working rules (the reforms to IR35) in the private sector has been postponed by a year to 6 April 2021. This is one of a number of measures announced by the government yesterday to attempt to ease the burden on businesses and individuals in light of the COVID-19 pandemic.
The reforms to IR35, which were due to take effect in a few weeks’ time, would have introduced fundamental changes to the tax rules (often referred to as IR35) that apply to consultants engaged through intermediaries (such as personal service companies) by medium and large businesses in the private sector.
The government has stressed that “this is a deferral not a cancellation and the government remains committed to re-introducing [the reforms]”.
The deferral of the reforms will be welcome news to a number of businesses, particularly in light of the exceptionally challenging conditions businesses are facing at the moment. However, whilst the delay will give a welcome reprieve to some, it will be important for businesses to continue their preparations this year so they are ready for the rules in April 2021. The government is unlikely to have much patience for a business that isn’t prepared and compliant with the new rules by that date. Therefore, once the current situation dies down, medium and large businesses that aren’t fully prepared for the reforms should ensure they take steps to comply.
If you have any questions about the off payroll working rules, or your business’s response to the challenges presented by COVID-19, please contact Joanna Chatterton, Emma Bailey, Tom Pennington-Hare or your usual Fox Williams contact.