Government delays private sector IR35 reforms until 6 April 2021
The government announced yesterday evening (17 March 2020) that is delaying the proposed private sector IR35 reforms (off-payroll working rules) by 12 months until 6 April 2021.
The impact of COVID-19
Due to be implemented in less than three weeks, it is believed this is due to the impact of COVID-19 and pressure by peers In the House of Lords.
Chief secretary to the Treasury, Steve Barclay said: “I can also announce this evening, madam deputy speaker, that the government is postponing the reforms to the off-payroll working rules, IR35, from April 2020 to the 6th April 2021.
“Government will therefore not move the original resolution tonight; but will shortly table an additional resolution confirming that we will reintroduce the off-payroll working rule provisions by amending the bill, with a commencement date of 6th April 2021.
“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.”
House of Lords requests IR35 reform delay
Members of the House of Lords called for the legislation to extend IR35 to be delayed at a hearing on 16 March.
At a Finance Bill Sub-committee, Lord Forsyth of Drumlean asked whether the Treasury and HM Revenue & Customs had considered deferring the changes, warning they could have a “very damaging effect on the incomes of many self-employed contractors”.
He further commented: “I wondered whether HMRC had considered, given the enormous financial impact which we are about to experience as a result of coronavirus, whether it might not be sensible for you to defer introducing these changes at least for six months if not a year.”
Supporting businesses affected by COVID-19
Further information on the government support package for businesses affected by COVID-19 can be found here.
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