Government announce delay to Off-Payroll, IR35 tax changes

The proposed changes to the Private Sector’s Off-Payroll working rules, also known as IR35, have been postponed for 12 months, the Government has announced.

Combatting Covid-19

The 11th hour postponement has been actioned in response to the Covid-19 (Coronavirus) outbreak. The news was revealed following a press conference on Tuesday evening in which the Chancellor, Rishi Sunak, revealed the economic steps the Government is taking to help businesses cope with the financial pressures of the pandemic.

The IR35 legislation is now due to be reintroduced in April 2021.

‘Deferral, Not Cancellation’

On announcing the delay to the Commons’, the Treasury’s Chief Secretary, Steve Barclay MP, was keen to stress it was ‘a deferral, not a cancellation’.

“This is a deferral in response to the ongoing spread of Covid-19 to help businesses and individuals,” he said.

“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.”

WATCH the announcement, here:

Delay ‘Creates a Challenge’

Reacting earlier to the Government’s announcement, Danbro’s Managing Director, Helen Broughton MBE DL, said she ‘understood’ the decision and urged contractors to work with ‘compliant providers’ moving forward.

“A lot of work by a lot of people has been invested into preparing for this change,” Helen said. “Whilst I understand the decision, in light of what our nation faces, the 11th hour announcement will cause confusion and create challenge.”

“We shouldn’t forget that the legislation hasn’t changed, only where the liability for the wrong decision sits. This now remains with contractors until next April and we would encourage them to work with compliant providers to help them make the right decisions in line with current legislation.”

Meanwhile, Danbro’s Executive Chairman, Damian Broughton MBE, was quick to reassure contractors that Danbro has the capacity to support them however they choose to operate.

In a statement he said: “A U-turn from the Government, but only for 12 months.

“Many hard working contractors were not only facing the uncertainty caused by Covid-19, but also a fundamental change in the way they operated when carrying out their contract.

“The ‘umbrella option’ has many advantages. This includes the normal tags of employment like sick pay and holiday pay, as well as the added advantage of BUPA when they join Danbro Umbrella.

“However, the decision regarding IR35 now remains with the contractor. If they decide to work through a new Personal Service Company (PSC) – as they regard their contract as not being inside IR35 – they can still claim statutory sick pay (SSP) back from the Government.

“At Danbro, we provide fast, secure, reliable online registration facilities for both PSCs and Umbrella contractors. So, even with this U-turn, we can still support our clients in whichever way they decide to operate.”

We’ll, of course, continue to follow the developments closely, and will be informing you, our clients, contractors and employees, of any updates relating to IR35.

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