The government has announced that the proposed reforms to the off-payroll working rules (also known as IR35) which were due to come into force from 6 April 2020 will be postponed until April 2021.
The changes would have meant that the responsibility for determining whether the IR35 rules apply to workers providing their services through a Personal Service Company (PSC) would move to the organisation receiving an individual’s services, provided that organisation met certain conditions. If the worker would have been deemed an employee for the purposes of IR35 then the organisation receiving the individual’s services would have been required to make deductions for income tax and employee’s NICs and also pay employer’s NICs on the fees receive for the services from 6 April 2020. For further details on the changes see our employment law updates here and here.
This postponement will no doubt provide some welcome relief to the organisations who would have been caught by the changes and who now find themselves dealing with other challenges amid the Covid-19 outbreak.
The government emphasised that this is a postponement and not a scrapping of the proposed changes, however the postponement will provide additional time for those organisations to undertake their assessments in relation to any independent contractors that they engage through PSCs to determine whether they are caught by IR35 rules.
These changes have applied in relation to public sector organisations since 2017 and will remain in place.
If you have any queries regarding the employment or tax implications of this announcement contact our Employment or Tax experts
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