News Item: IR35 Tax Rules Deferred for a Year

It has been announced, as a measure to help businesses cope with the ongoing impact of coronavirus, that the introduction of new tax rules relating to the use of temporary contractors will be delayed.

Introduced in 2000, IR35 rules apply to self-employed contractors and are designed to tackle perceived abuses or avoidance of government taxation, often associated with individuals working off-payroll. The government has admitted these are a "major change" for industry, but insist reforms are necessary to reduce what is seen as a "fundamental unfairness" with the existing rules.

Chief secretary to the Treasury Steve Barclay made this statement in the House of Commons: "I can also announce that the government are postponing the reforms to the off-payroll working rules IR35 from April 2020 to 6th April 2021.

"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 remain committed to reintroducing this policy to ensure that people who are working like employees, but through their own limited company, pay broadly the same tax as those employed directly."

A a £330billion package of guarantees has also been introduced and will include increasing the amount that businesses can borrow through the Coronavirus Business Interruption Loan Scheme from £1.2million to £5million, and ensuring businesses can access the first six months of that finance interest free.

Chancellor Rishi Sunak has said: "That said, this is only a delay, albeit a very welcome one. It does, however, give private sector firms vital time to prepare for reform, which can only be a good thing for contractors. What matters now is that businesses use this time wisely.

"We will do whatever it takes to protect our people and businesses from the effects of this global economic emergency brought on by the Coronavirus pandemic."

The Chancellor's financial package for the UK economy also includes a business rate holiday, emergency loans for companies, and financial assistance to airlines.