Confirmed: IR35 changes WILL be going ahead in April 2021, government says
Posted on 2nd July 2020 at 13:12
It's been a rather quiet past few weeks in the IR35 world which hasn't come as a complete surprise, considering we've had such a number of other things going on recently.
However, contractors all over the country have this morning woken up to the news that the government has confirmed that the changes to the off-payroll working rules for the private sector will be going ahead in April 2021.
Just a few weeks ago there was a small glimmer of hope for contractors when MPs were set to vote for the changes to be postponed until 2023, but unfortunately the vote on the two-year delay failed to secure a house majority with 254 MPs voting for the postponement (including Labour, who had originally declined to vote), and 317 voting for the rules to come in in April 2021.
IR35: a quick recap
Off-payroll working rules (IR35) were introduced in the year 2000 to ensure that people who work as contractors through their own limited companies pay the same level of Income Tax and National Insurance Contributions as employees. Following a reform to the rules in April 2017, public-sector organisations who took on contractors became responsible for ensuring that both they and the workers they engage were paying the correct amount of tax, which has been an effective method of improving tax compliance.
At the Autumn Budget in 2017, the government revealed its plans to start a similar plan for tackling non-compliance in the private sector. A year later, during the Autumn Budget in 2018, it was announced that plans for the reform would be extended to medium and large organisations, and the changes would kick in from April 2020.
The devastating effects of the coronavirus pandemic caused a delay of one year to the proposed changes, which produced a mass sigh of relief within the contracting industry.
So what’s the latest now?
Yesterday, the April 2021 rollout for the new IR35 changes were confirmed to be going ahead as Schedule 1 of the Finance Bill 2019-21 was passed through the Report Stage unchanged.
Amendments can very, very occasionally be made when a Bill is in the Third Reading stage, which is the next step in this process - though unfortunately, there's an incredibly small chance of that happening and it is almost certain that the rules will be rolled out in April 2021 so we are not holding out any hope.
Nicola J Sorrell
- Effective Accounting
Founder | Xero Champion | IR35 Expert
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