Many will be breathing a sigh of relief after a year long delay has been announced to the roll-out of the private sector off-payroll rules.
This controversial change has been postponed as response to the Coronavirus.
In the House of Commons yesterday, Steve Barclay, the chief secretary to the Treasury, said that the IR35 changes that were due to come into force at the start of April 2020 are to be pushed back for a year and begin in April 2021. “This is a response to the ongoing threat of Covid-19 as a way of helping businesses and individuals” he said.
He also added that it was not to be confused with a cancellation and that the Government will remain committed to reintroducing the policy to ensure that people working like employees, in their own limited companies, pay the same tax as those who are employed directly.
Long before the postponement was announced, employers, recruiters and freelance groups had been calling for a delay, so it comes as a welcomed announcement.
The CEO of Morson Group, Ged Mason said that the delay has come at a “Poignant time” for UK industry. He said “Many businesses that rely on flexible talent and contractor populations will take a sigh of relief”
IR35 states that if a contractor is to carry out the same work, or similar work to a permanent staff member, the employer is required to take income tax and NI contributions like they were an employee. The new legislation was introduced to make sure that workers that undertake similar roles are paying the same tax amounts regardless of whether they were an employee or a contractor.
The changes will shift the responsibility of assessing which of the contractors come under this category to employers. These changes have applied to the public sector employers since 2017.
Head of the legal services department at Brookson Group, Matt Fryer, said “The delay will allow businesses that have not yet prepared for the change, more time to take action” “Hopefully some of the businesses that have implemented knee-jerk blanket bans on contractors will now have the time to reconsider this as their strategy for ensuring access to flexible expertise.”
He also added that employers should now have a clearer understanding and guidance from the HMRC than when the initial date for the rollout was set. ” Those end hirers that have invested in getting IR35 right are going to be well prepared for April 2021 and can now use this next year to consider how to accommodate for roles currently thought to be inside the regulations of IR35.
“We would advise businesses that do work with contractors to build IR35 compliance into their planning for the next financial year. Bearing in mind that it has taken many companies 6 months to prepare for the initial deadline”
Chief executive of the FCSA, Julie Kermode has said the delay would enable businesses to focus more on the immediate complexities of responding to the Coronavirus. Which is priority. ” I very much hope that some detailed analysis of the wider implications of this reform can be undertaken in the next few months in order to establish whether or not it should be scrapped entirely.”
The operations director at APSCo said “Many companies have already spent a large amount of their time and effort preparing and planning for the changes” “Nonetheless, many in the staffing and recruitment sector will welcome the change” “Now’s not the time to make flexible labour more expensive or the hiring of contingent labour more difficult, when our sector is facing unprecedented times.”
She also added that the delay could kick start the hiring of remote workers who operate through personal service companies, noting that some employers have had to put a blanket ban on using contractors as their response to the changes in IR35.
Andy Chamberlain the director of policy at IPSE also welcomed the delay. He said it was a “sensible step” to limit damage to self employed. “It’s right and responsible to delay the changes during the coronavirus, this will reduce the strain and income loss for self-employed businesses”
Chamberlain called on the government to do more to protect the income of the contractors. He said “They must create an emergency income protection fund to keep the UK’s crucial self employed businesses afloat”