Last night the government announced a postponement of the private sector IR35 tax reforms until 06 April 2021. The decision was made due to pressure from contractors, campaigners and the House of Lords who warned that the loss of work due to covid-19 for contractors deemed ‘inside IR35’ would be disastrous.
Speaking in Parliament, Chief Secretary to the Treasury Steve Barclay said: “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.”
IR35 specialist Seb Maley stated that the government had “seen sense”.
“Given the economic challenges that lie ahead of the UK, now certainly would not have been the right time to roll out needless tax changes that endanger hundreds of thousands of contractors’ livelihoods.”
Although government has stated its intentions to legislate next year, contractors and clients will be welcoming the valuable time granted by the awful circumstances. The announcement presents the opportunity for greater consideration and discussion about the IR35 measures.