Reform deferred by a year
If you currently work as a contractor, are considering becoming a contractor, or own a business that hires contractors, IR35 is something that you should be familiar with.
Although the Chancellor, Rishi Sunak, previously announced that IR35 reform in the private sector would be introduced as planned on 6 April 2020, the Government has pushed this back amid the ongoing coronavirus pandemic.
Steve Barclay, Chief Secretary to the Treasury, announced on 17 March that reform will be deferred by a year – but made it clear it isn’t being cancelled. He said: ‘This is a deferral in response to the ongoing spread of COVID-19 to help businesses and individuals.’ It comes after a House of Lords finance bill sub-committee said that adding another burden on business would be ‘perverse’.
Private sector IR35 reform means that contractors and freelancers will no longer be responsible for working out their tax status. Instead, it’ll be down to the clients they work for (although smaller businesses are exempt from the change).
As businesses and the self-employed now face an uncertain few months, the deferral should at least give them more time to prepare for reform. Given the economic challenges that lie ahead of the UK, now certainly would not have been the right time to roll out needless tax changes that could endanger hundreds of thousands of contractors’ livelihoods.
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