The long awaited extension of the off-payroll working rules (IR35) from the public sector to the private sector has been postponed. The change was to be put place in from April 2020 and will now be introduced 12 months later, in April 2021.
Business has been concerned that too few people are properly prepared for either the additional administration, or the additional cost, and the delay has been welcomed as a sensible move to allow business to prepare. Clearly the additional pressure on business brought about by the Covid-19 situation has influenced the government to delay this unpopular change.
Steve Barclay, Chief Secretary to the Treasury, announced at the end of the Budget debate that this would only be a delay until 6 April 2021, and the government is still committed to pressing ahead with the change.
The off-payroll working rules, when they are introduced, will see private sector companies, other than small businesses, having to decide contractor’s status and apply PAYE if appropriate. At the moment it is up to the contractor to self assess their status under IR35. This represents a significant administrative burden for many businesses who are frequent users of contractors. It brings with it a financial cost in terms of the employers National Insurance charge at 13.8% which the business will also need to pay.
Please get in touch should you need any further advice or guidance in relation to IR35 being postponed or any additional tax matter.