Off-Payroll Tax Crackdown Delayed by 12 Months Amid Covid Crisis
The government has pushed back the controversial off-payroll working rules, known as IR35, by a full year to April 6, 2021. Originally set to come into force this April, the delay is part of the UK’s economic response to Covid-19.
What’s IR35 and Why Does It Matter?
IR35 was introduced in 2000 to stop contractors working like employees from dodging tax by using their own limited companies. The new reforms, first announced in 2018, target non-compliance and shift the burden of deciding a contractor’s tax status to medium and large private and third sector organisations – just like in the public sector.
Government Backs Delay to Support Businesses
Financial Secretary to the Treasury Jesse Norman said:
“We will do whatever it takes to support the British people through Covid-19. That is why, as well as the current support measures, we have delayed the off-payroll working reforms to April 2021.”
The move buys businesses and contractors more time to prepare for major tax changes, acknowledging the upheaval the reforms could cause during a tough economic period.
Next Steps
The delayed start date will be officially set out in the upcoming Finance Bill. Until then, contractors and companies can carry on as they were for another year – but the tax crackdown is coming, and it’s set to shake up the contractor market.
