It has been announced by Parliament that the planned IR35 tax reforms will be pushed back by a year to April 2021. The announcement has been welcomed by many contractors in the midst of the outbreak.

IR35 is a piece of UK tax legislation relating to off-payroll working. The legislation is designed to tackle tax avoidance from "disguised employment" where employees register themselves as freelance contractors, in order to pay less tax. Under IR35 the contractor's limited company is responsible for determining the employment status of its workers and thereby ensure that tax and national insurance contributions are paid accordingly. The changes that were to be implemented in April this year, will see the current rules extend to large and medium private sector businesses in the UK and make them responsible for setting the tax status of any contract worker they use. The rules currently only apply to the private sector.

The Government has stressed that it is a deferral, not cancellation of the reforms and that they remain committed to introducing the policy.

Originally published 30 June, 2020

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