IR35 – Private Sector Reform Delayed by 1 Year

It has been announced that due to the Coronavirus, the proposed private sector reforms to IR35 will be delayed by 1 year. Instead of coming into force on 6 April 2020, it will now be deferred until 6 April 2021.

The official announcement can be viewed via Twitter:- https://twitter.com/offpayroll/status/1240001240827822081

This means that we go back to the pre-existing rules which require the contractor themselves to “self assess” whether they are caught by IR35 or not, and where they are responsible for calculating and making “deemed payments” in their own payroll as necessary.

The new reforms were designed to transfer that obligation to the client/agency who would have become responsible for deciding whether IR35 applied and, if so, deducting tax and NIC from their contractors invoices. This system is already in existence for public sector contracting since April 2018 and the latest announcements don’t appear to change the public sector rules.

Whether contractors have or havn’t already moved to PAYE or umbrella companies, there may still be time for them to contact their clients and agencies to explore whether they can continue to contract via their personal service companies for another year.

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