Changes to IR35 off-payroll working rules which were announced last year for the private sector have now been delayed by 12 months. This decision to delay has been put in place due to the growing uncertainty businesses are currently facing due to the COVID-19 pandemic.
Yesterday evening the 17th March 2020 Stephen Barclay MP, the Chief Secretary to the Treasury announced that the IR-35 changes will be delayed by 12 months to ease the pressure on businesses and contractors in this time of uncertainty.
Chief secretary to the Treasury Steve Barclay said in his announcement:
“This is a deferral and not a cancellation, and the government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company pay broadly the same amount of tax as those employed directly.”
The legislation as it stands now has been pushed back to the 6th April 2021, instead of 6th April 2020.
IR35, a tax law was introduced into the Public Sector some years ago. This extension would have seen the legislation apply to the rest of the UK work force. Contractors who, once tested are found to be within the legislation (or ‘Inside IR35) would no longer be able to work via their own LTD companies and would have to be engaged either PAYE or via a third party Umbrella provider.
Richard Allan from Champion Contractors explains that “ Limited company owners don’t have to pay National Insurance Contributions (NICs) on company dividends, unlike permanent staff who do have to pay income tax and NICs on their entire salary. HMRC views this as an unfair advantage of current tax laws which are favourable to businesses. “
Businesses and organisations across the private and public sectors, including Oyster have been working hard to prepare for the legislation changes, however, this delay has come as a small blessing. This will give everyone time and energy to focus on more pressing issues in the current state while battling the effects of COVID-19.
If you have any questions regards IR35 changes and how it might affect you personally or your business you are welcome to get in touch with us via firstname.lastname@example.org or contact your consultant directly.
You can also read more about IR35 changes below: