IR35 reforms to be delayed for a year due to coronavirus

Chief Secretary to the Treasury, Steve Barclay, has announced that the IR35 tax reforms will be pushed back by one year, less than a week after the controversial measures were confirmed in the Budget.

Barclay confirmed that the changes, which will clamp down on tax avoidance by targeting contractors for companies who are, in practice, providing the same service as employees, would not go ahead in April as previously expected.

Instead, the measures will come into effect on 6 April 2021.

Barclay said that move is part of a broad package of measures the Treasury has announced to protect the economy from the coronavirus outbreak.

He confirmed that the decisions were “a deferral, not a cancellation, and the government remains committed to reintroducing this policy”.  We have also seen copies of emails issued by HMRC yesterday which confirm that HMRC continue to view the introduction of IR35 as key to addressing a perceived mismatch between the tax paid by contractors compared to employees. 

We recommend that, as far as possible, businesses continue to plan for the introduction as these rules are still coming however the government is rightly recognising that business has enough to deal with in the current environment. In our opinion, this is the right move rather than increasing pressure on an already strained economy.

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If you have any questions regarding the IR35 reforms, please contact us on 0191 285 0321 or email advice@taitwalker.co.uk.