Coronavirus crisis sees gov postpone IR35 tax rule reforms

HMRC

The implementation of reforms to IR35 tax rules in the private sector have been postponed by government for a year in a bid to safeguard the economy against the coronavirus crisis.

Speaking at yesterday’s Budget debate in the House of Commons, chief secretary to the Treasury Steve Barclay announced the reforms to IR35 off-payroll working rules would now come into effect on 6 April 2021.

Last month, the Treasury confirmed it was to push ahead with changes to the rules, which would see every medium and large private sector business in the UK become responsible for setting the tax status of any contract worker they use from April 2020. Previously the rules had only applied to the public sector.

Chris Biggs, Managing Director at Theta Financial Reporting, said: “This postponement is welcomed and will give some respite to thousands of consultants and freelance professional service workers in regards to their own tax situation, but the Covid-19 crisis is causing significant stresses in short terms for self-employed workers.

“Furthermore, it may be worth asking how many businesses will reverse the considerable efforts they have made to become IR35 compliant to account for this postponement.

“With daily updates from the government, there needs to be greater transparency from businesses and HMRC to ensure every skilled gig economy worker has a backup in place if they are unwell.

“Companies need to ensure that do not act rashly and protect their employed and contracted workforce to make sure that the professional services sector does not grind to a halt and we lose thousands of fantastic consultants over the course of the next quarter.”