Government presses pause on IR35 changes in private sector.

Delay until April 2021.

Against the rising crisis caused by coronvirus, the government has delayed the implementation of IR35 changes in the private sector. While some in the sector are welcoming this move, the last minute nature of it has been criticised by others, noting that for many contractors, employers and recruiters changes have already been made to employment policies and practicalities which will be difficult to reverse. 

The Lords made it pretty clear in their committee hearing that the Treasury’s IR35 position was increasingly untenable, with the rising backdrop of coronavirus,” commented James Poyser, CEO of inniAccounts and founder of offpayroll.org.uk

“I do welcome this pause – it means that contractors can now switch gears and put all of their energy into the wider challenges we’ll all going to face in the coming months. Whilst nobody can rest easy right now – permie or contractor – this announcement will make many contractors feel much better about the year ahead.

“We’re going to have to keep a watching brief on the market in the coming months. Whilst the wider economy is due to enter a turbulent period, it’s clear by the scale of the £330 billion financial measures made available by the Treasury today that the government wishes to keep the economic engine running as much as they can. We hope these two factors combined have an impact on the contracting market.

“This will also give time for the Lords review to be published, and we hope that the Treasury and HMRC listen to their recommendations before attempting to re-table this legislation for April 2021.”

Qdos CEO, Seb Maley, added: “The government has seen sense and made the right call in these unique circumstances. 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.

“That said, this is only a delay, albeit a very welcome one. It does, however, give private sector firms vital time to prepare for reform, which can only be a good thing for contractors. What matters now is that businesses use this time wisely.”

Meanwhile IPSE have described the move as “the sensible thing”.

Andy Chamberlain, Director of Policy at IPSE said: “These changes have already undermined the incomes of many self-employed businesses across the UK. However, they would have done even more serious damage if they had gone ahead as planned.

“It is right and responsible to delay the changes to IR35 for at least a year during the coronavirus crisis, to reduce the strain and income loss for self-employed businesses,” he added. “This is a sensible step to limit the damage to self-employed businesses in this grave and unprecedented situation, but we also urge the government to do more. It must create an emergency Income Protection Fund to keep the UK’s crucial self-employed businesses afloat.”

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