Changes to off-payroll working rules delayed until 2021

Newsletter issue - April 2020.

Amid concerns about their potential impact during the coronavirus pandemic, the government has announced a one year delay to changes to the off payroll working rules, due to take effect from April 2020.

In an announcement at the end of the parliamentary debate on the Budget speech, Steve Barclay, chief secretary to the Treasury, said that the government is postponing the reforms to the off payroll working rules (known as the IR35 rules) from April 2020 to April 2021.

Off-payroll working rules, known as IR35, were introduced in 2000 to ensure that someone working like an employee, but through their own limited company, pays broadly the same tax as someone employed directly.

The reforms, announced in the 2018 Budget, are designed to tackle non-compliance with the off-payroll working rules. The reforms make medium and large organisations in the private and third sectors responsible for determining the tax status of contractors and ensuring that the right employment taxes are paid. The reforms have previously been implemented in the public sector.

The government continues to believe that it is right to address the fundamental unfairness of non-compliance with the existing off-payroll working rules, however the government also recognises that the reforms would be a significant change for both businesses and contractors. Delaying means changes will not need to be implemented until next year.

The new introduction date will be legislated in the Finance Bill 2020.