IR35 Reforms Postponed for a Year in Wake of Coronavirus

IR35 Reforms Postponed for a Year in Wake of Coronavirus

Chief Treasury Secretary Steve Barclay has announced that IR35 tax reforms will be delayed for a year to help freelancers during the Coronavirus crisis.

At the House of Commons yesterday, Barclay stated that the measures will go ahead in April 2021, a year later than original plans.

He explained that the move to delay IR35, a measure that aims to tackle tax avoidance by targeting contractors who work as full-time employees, was included in the package of measures the Treasury had announced earlier to safeguard businesses from the Coronavirus emergency.

Barclay made clear that this decision is simply a deferral in response to the ongoing COVID-19 outbreak to help individuals and business cope, but that the rules will not be removed altogether.

He confirmed that the government does not wish to cancel this rule, but remains committed to reintroducing this policy. This will ensure that people working like employees, but through their own limited company, pay generally the same tax as those directly employed.

Chancellor Rishi Sunak also announced £330bn of government-backed loans and guarantees to support businesses during the coronavirus economic crisis. These will include business loans, tax breaks and a potential package for airlines and airports. In his extensive list however, he did not mention changes to IR35 which infuriated contractors.

Based on the delay announced by the government, IR35 rules will now come into force on the 6th April 2021.