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Due to the recent Coronavirus outbreak and pressure from freelancers and businesses, the UK government has delayed the IR35 rules by 12 months. The controversial new off-payroll working rules were meant to come into force on 6 April 2020. But, these will now be postponed by one year.

Steve Barclay, the chief secretary to the Treasury said:

“I can also announce this evening, that the government is postponing the reforms to the off-payroll working rules, IR35, from April 2020 to 6th April 2021.”

 

“The government will therefore not move the original resolution tonight. Instead we 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.”

Government warns that IR35 is not cancelled but postponed

Although the wider backdrop of COVID-19 is concerning for everyone, this will be welcome news. Especially for freelancers, contractors and businesses who have been campaigning against the new rules.

However, you must remember this is not a cancellation of the rules, it’s only a deferral. For now, the government wants businesses and individuals to focus on dealing with COVID-19. Keep in mind that this will continue to be implemented in 2021.

It is hoped the delay will give private sector firms more time to prepare and successfully implement the changes. Also, at a time when the contract market is struggling, this news will be welcomed by the industry.

Had the rules proceeded as planned on 6 April 2020, many individuals would be taxed as employees without the security and many of the employment rights enjoyed by permanently employed members of staff.  Indeed, many have already transitioned to being taxed as employees and for those, the IR35 delay has come too late.

Need help navigating the IR35 rules?

If you are an individual who is a contractor or freelancer or if you are a business who employees contractors and you would any advice on the IR35 off-payroll working rules, please get in touch with Ann Bibby on abibby@ellacotts.co.uk or 01295 250401 or contact us here.

Read more about the IR35 rules in our latest blog or you can download our free IR35 guide.