IR35 reform postponed for a year

Yesterday Chief treasury secretary Steve Barclay announced that the IR35 tax reform will be postponed by one year. The decision is part of measures announced by the Treasury to protect the economy from the coronavirus outbreak.

The reform was confirmed in the Budget less than a week ago. The measures now will come into effect on 6 April next year.

“That said, this is only a delay, albeit a very welcome one. It does, however, give private sector firms vital time to prepare for reform, which can only be a good thing for contractors. What matters now is that businesses use this time wisely.” – Barclay said.

 

IR35 Reform: Refresher 

  • IR35 aims at ensuring that contractors pay the same tax and NI contributions as employees; meaning it is trying to prevent contractors to work as “disguised employees”.
  • If IR35 applies, the fee payer (the end-user, a recruitment agency, or other third party paying the intermediary) will be responsible for paying the related tax and NIC.
  • IR35 rules have been already implemented for contractors working for public sector organizations.
  • The new rules will transfer responsibility from contractors to end-users (large and medium companies) to assess IR35.

Read more about the reform here.

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