During the Budget debate in the commons last night, the chief treasury secretary, Steve Barclay, announced that the IR35 tax reforms, planned to come into effect on 6th April, will be delayed by one year due to the current coronavirus outbreak.
These tax changes will clamp down on tax avoidance by targeting contractors for companies who are, in practice, providing the same service as employees. They will now come into effect on 6th April 2021. This comes less than a week after the controversial measures were confirmed in the Budget.
Barclay said the move is part of a broad package of measures the Treasury has announced to protect the economy from the coronavirus outbreak. He confirmed that the decision was ‘a deferral, not a cancellation, and the government remains committed to reintroducing this policy’.
Businesses welcomed the move, with IR35 expert Qdos boss Seb Maley saying that government had ‘seen sense’.
However, Barclay has stated that ‘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.’
The Budget announcement had been met with anger by businesses, who had pushed back against the reforms.