Off-payroll working (IR35) changes postponed

Organisations and individuals who have been preparing for changes to the off-payroll working rules will now have an additional year. The changes were due to take effect in April, but in the face of the uncertainty and business challenges presented by coronavirus, they have been deferred to 6 April 2021.

The planned changes would have seen the extension of the off-payroll working rules to large and medium sized private sector business (commonly known as the IR35 reforms) discussed here. The decision to defer for 12 months to April 2021 is part of the package of measures announced by Government to ease the pressure on business in the light of coronavirus.

The current IR35 rules will therefore continue to apply to the private sector for the time being, with individuals’ personal service companies (or other intermediaries) continuing to be responsible for determining whether they are employees of end clients for tax purposes and paying the correct amount of tax.

Many businesses have already done a lot of work to prepare for the previously announced changes. That work will still be useful, either in anticipation of the new commencement date next year, or in making changes to structures and contracts now which still make sense going forwards.  There will not however, for the time being, be any obligations on end clients to make tax status determinations for individuals who use intermediaries like personal service companies.


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