IR35 Reform | Essential Guidance for Businesses
A week is a long time in politics, and a lifetime during the COVID-19 pandemic. Earlier in the year the Government announced a review on the implementation of the new IR35 reform. In the budget last week, it was confirmed that the changes would come in to force as planned in April.
IR35 Reform Postponed
However on Tuesday 17th March the Government announced quietly that the IR35 reforms were now being postponed for 1 year. The House of Lords last week warned that given the current economic climate due to Covid-19, not postponing the reform of the IR35 tax rules would be ‘an additional burden’ on businesses.
This will come as great relief to many companies and contractors who have been operating under the current IR35 system for years, but who may be reclassified to workers, and be paid through PAYE. The Government announcement made it very clear that it was merely being postponed, rather than being cancelled.
Businesses still need to consider if those who provide personal services to a company as a self employed contractor are indeed truly self employed, or whether they fall under ‘worker’ or ‘employed’ status moving forward and make appropriate changes to the relationship and pay.
Guidance for Business Owners
Whilst it is certainly important that companies consider the new rules and look to change in the near future, the UK Government has considered the fact that both businesses and those using the IR35 system have more pressing matters on which to concentrate at this time.
It can therefore be put on the back-burner for now, however it will need to be revisited by all organisations potentially impacted by these changes if they come into force in 6 months time.
If you need advice on the changes to the IR35 system, please get in touch with our legal team here at Wirehouse.