Last night (17 March 2020) the UK’s Chief Secretary to the Treasury, Steve Barclay, announced in the House of Commons that the government is postponing the implementation of the changes to the application of the off payroll working tax rules to private sector clients (IR35) from 6 April 2020 to 6 April 2021 to ease pressure on businesses and individuals struggling with the COVID-19 crisis.
The Chief Secretary reiterated that it was “a deferral, not a cancellation” and that “the government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company, pay broadly the same tax as those employed directly”.
Yesterday’s announcement is somewhat surprising given the confirmation in last week’s Budget that the IR35 reforms would go ahead as planned but illustrates clearly just how quickly the government’s priorities have changed in the past week. Many contractors and their clients will breathe a deep sigh of relief and, hopefully, the delay will lead to a more considered discussion about how the new rules should be implemented and the challenges that they will present to contractors and their clients alike.
The Chief Secretary’s announcement came on the same day that the UK Chancellor unveiled the Treasury’s latest measures to combat the crisis, which we reported on yesterday (UK Chancellor’s latest measures in response to COVID-19).