At the end of the parliamentary debate in March 2020, Steve Barclay announced that the IR35 tax reforms would be delayed for a year. The changes due on 6 April 2020 have now been postponed to 6 April 2021, amid coronavirus pressure on the businesses.

The Chief Treasury Secretary stated that, “This is a deferral, not a cancellation. The government remains committed to re-introducing this policy reforms to ensure that people working like employees but through their own limited company pay broadly the same tax as those employed directly.”

According to the government, rolling out needless tax reforms would jeopardize the economy of the UK. Thus, having a break on the reforms for 12 months would be wise in light of the coronavirus pandemic. 

It would also let the businesses have time to make necessary changes. And HMRC has confirmed that the Status Determination Statements (SDS) will have no dispute regarding the changes of businesses until 2021. 

IR35 reforms refers that the contractors are taxed in the same way as permanent employees.The changes in off-payroll working rules (IR35) will be applied differently for public and private sectors from 6 April 2021. In private sectors, if the work looks more like an employment contract then the worker will remain responsible for ensuring the IR35 rules are applied and determining the tax status of the contract. However the public sectors will be responsible for deciding the employee status of workers. Private sectors will ensure that the payments are made to their personal services company (PSC) whereas the public sectors will make sure that the payments are made through a payroll, if the contract looks like an employment. 

Sooner or later IR35 reforms will bring changes in the way freelancers or contractors work. But for now Taj Accountants believe that holding the IR35 reforms for a year has been the most sensible step.