IR35 Postponed until April 2021

Earlier this month, IR35 was postponed. The Government has decided that the change to off-payroll working rules, which would apply to people contracting their services to organisations outside the public sector, would no longer be taking place this financial year. The measure was announced to reduce pressures on businesses and individuals facing potential economic hardship over the next coming months.

Steve Barclay, chief secretary to Treasury, stated that the decision to suspend IR35 was only a deferral and not a cancellation, as the Government remained committed to reintroducing the policy.

The decision was announced among a £330 billion financial package for the UK economy that includes a business rate holiday and emergency loans for businesses.

The legislation is now expected to take effect from 6 April 2021, rather than 6 April 2020.

At the moment, limited company contractors are solely accountable for the determination of their own IR35 employment status. The change in the law makes you the ‘end-user’ client responsible for determining their individual IR35 employment status. The introduction of IR35 considers if a contractor engaging with your business is acting as a genuine independent contractor or as a ‘disguised employee’ who is therefore subject to PAYE employment taxes.

The deferral now gives businesses and employees more time to familiarise themselves with the change in legislation and make appropriate adjustments.

For those businesses and individuals who had already prepared for IR35, the changes made to contracts are still of course sensible to use ahead of the legislation now coming into force next year.

If you’re yet to prepare for IR35, it can take time to research and understand the full implications of the change in legislation. This process can be streamlined when connecting with a reputable agency partner. IMS Decimal can assist you with this, as we can help you understand how the market is responding to the changes, as well as providing insights into how other businesses and contractors are reacting to the upcoming change of rules.

If you’d like to partner with our expert team or seek further advice on IR35, you can do so by contacting us here.