"IR35” changes to the taxation of off-payroll working delayed until next year

The Government announced on Tuesday evening (17 March) that the changes to IR35 (see our blog post) due to take effect from 6 April 2020 will now be delayed until next April. The deferral is in response to the spread of COVID-19, and had been suggested by the House of Lords finance bill sub-committee earlier this week.

The deferral will be welcomed by clients who were due to implement the changes in less than three weeks’ time in an unusually challenging business environment, and by contractors who were likely to be affected by the changes at a time of economic uncertainty. This is a significant u-turn from the Government’s previous position, reiterated as recently as the Budget last week (11 March), that the reforms would go ahead as planned.

As well as providing some space for businesses to focus on the challenges of COVID-19 in priority to a tax change, the deferral also means that businesses have an extra year to assess the position of their contractor population and make appropriate changes. One of the lessons from the last few months has been that many businesses were not well prepared for the changes and did not start their planning soon enough to comfortably and confidently meet the deadline. In that respect, this is a great opportunity to make sure suitable preparations are in place for April 2021. We have great depth of experience in this area, and would be pleased to assist with your implementation of the changes in due course.