As part of the government efforts to ease pressure on businesses and the self-employed, the new IR35 rules, which had been due to apply from next month, have now been deferred for one year.
The controversial IR35 tax reforms aimed to crack down on “disguised employment”. The changes that will now not be applied until April 2021 would have made privately owned firms responsible for assessing the tax status of off-payroll workers employed via limited companies.
Quite frankly, it’s pretty hard to keep on-top of the rollercoaster of changes that are amongst us, especially as this U-turn comes less than a week after the new rules were confirmed in the Budget, despite the criticism and concerns that businesses were not ready for the changes to be implemented next month.
Speaking in the House of Commons Budget debate on Tuesday night, Chief Treasury Secretary Steve Barclay said: "This is a deferral in response to the ongoing spread of Covid-19 to help businesses and individuals. This is a deferral, not a cancellation, and the government remains committed to re-introducing this policy."
It’s important that every business owner working in a sector reliant on contractors, such as financial services, construction and recruitment still make the appropriate preparations ahead of April 2021. Previously, when Rishi Sunak decided to press ahead with the changes this April, he promised that HM Revenue & Customs (HMRC) would take a “light touch” to the legislation in the first year. We believe that that with the deferral and the extended time for businesses to make the appropriate preparations, HMRC may not take such a light tough next year.
If businesses being affected by the IR35 tax reforms haven’t done the required preparations already, it is important that you use the extended time to ensure the smooth transition in April 2021.
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