The Off-Payroll private sector rollout has been deferred by a year, until April 2021. Steve Barclay MP made the announcement in the House of Commons tonight.
Barclay, the Chief Secretary to the Treasury, stated that this was not a cancellation of the controversial policy, but a necessary delay due to the Coronavirus outbreak:
“The Government is 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 remains committed to reintroducing this policy to ensure that people working like employees but through their own limited companies pay broadly the same tax as those employed directly.”
You can watch the announcement on Parliament Live TV – the relevant section starts at 18:54:40.
What happens now?
Although the Government says that the off-payroll rollout has merely been deferred, and not cancelled, it does seem unlikely that the UK economy will have recovered from the current global crisis by April 2021, so it is entirely possible that the implementation gets delayed again on a rolling basis. Unfortunately, this also means that the industry has a ‘Sword of Damocles’ hanging over it in the absence of a cancellation.
We must still prepare for the deferred implementation in April 2021; this will give clients more time to understand the ‘off-payroll’ rules, and hopefully take a less panicked approach to assessing contractors’ employment status (i.e. far less blanket inside IR35 assessments).
For some contractors, this news may have come too late for their current contracts; if they have been forced into using an umbrella company, for example, by a client who insists they are ‘inside IR35’.
For others, this is very welcome news, and they will be able to trade as usual – albeit subject to the existing IR35 rules.
For everyone, however, we have another chance to forcefully seek a genuine review of IR35 (both Section 8 of the ITEPA 2003 – the original IR35 legislation, and the new Section 10 – the ‘off-payroll’ rules).
Further Government literature covering this deferral is expected to be published soon, together with measures aimed at supporting businesses in general during the COVID-19 emergency.