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IR35 change delayed until April 2021

Working in an office - photo by Annie Spratt on Unsplash

The latest change to IR35, the tax reform regulations, due to come into effect on 6 April 2020 has been delayed until 2021.

If you or your business are affected by IR35, no doubt you know about it and have already taken steps to make sure you’re compliant. IR35 affects contractors and the companies who hire them.

The Government introduced the regulations back in 1999 to make sure that if a contractor appeared to be working like someone employed directly by a company, the contractor pays the same tax and National Insurance as a normal employee.

The rules and the change due to be introduced this April are explained in Government guidance: Understanding off-payroll working (IR35)

Contractors and businesses including many Tide members have spent years getting ready for the change that was due to come into effect in just a few weeks’ time. Many businesses have changed their staffing structure, how they carry out projects or taken a completely ‘risk-free’ approach and let go all contract staff. Many contractors and self-employed people have faced unemployment or reluctantly changed their lifestyle by taking permanent jobs.

The delay has been announced as part of the Government’s overall measures to ease pressure on businesses and individuals during the coronavirus crisis. Speaking in the House of Commons on Tuesday evening (17 March), Steve Barclay, the Chief Secretary to the Treasury said:

“We will do whatever it takes to give the British people the tools to get through this challenge. I can also announce that the Government are postponing the reforms to the off-payroll working rules IR35 from April 2020 to 6 April 2021…

“… This is a deferral, not a cancellation and the Government remain committed to reintroducing this policy to ensure that people who are working like employees, but through their own limited company, pay broadly the same tax as those employed directly.” (Source: official Hansard transcript)

Have your say

How does this delay in IR35 affect you? What changes have you made to how you work or how you run your business, as a result of IR35? Would you have made different decisions if you’d known you had an extra year?

We’re keen to hear from you – get in touch with us on Facebook, LinkedIn or Twitter.

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Suzanne Worthington

Senior Writer

Tide Team

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