IR35 reforms to private sector postponed until April 2021

In unexpected, but almost certainly welcome news for businesses, the Government announced last night that it is postponing until 6 April 2021 its reforms to IR35 in the private sector, which were due to come into force on 6 April 2020.

This news has come just a matter of weeks after the Government reviewed the implementation of the rules and announced that they would still take effect from April 2020. It is clear that the impact of the Coronavirus crisis has now caused the Government to reconsider.

Speaking in the House of Commons, Stephen Barclay, Chief Secretary to the Treasury 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….”

For many businesses, this announcement will give much needed breathing space to be able to manage the impact of the reforms, particularly as they will introduce a radical new landscape, and potentially significant new tax and NIC obligations, for businesses contracting workers through personal service companies.  For now, there is no doubt that managing the impact of Coronavirus will be upfront and centre for all businesses, but they should keep these reforms on their radar to ensure they are prepared for April 2021.

For further details on the proposed reforms see:

IR35: Government publishes draft legislation reforming private sector off-payroll working