Will IR35 go ahead in April?

The effects of Covid have caused numerous u-turns and delays to reforms and policies (including the paused restart of many schools - something which the Government was clearly loathed to implement but had little choice with rising Covid cases due to the new more transferable variant in certain areas).

But one thing is for sure, the latest lockdown in the UK has raised the question: will IR35 be delayed again? The changes were originally due to take effect in April 2019, but was delayed a year as a result of the coronavirus pandemic. With Brexit getting over the line in the final breaths of 2020, we believe that IR35 is unlikely to be delayed again - or at least it would be foolish for companies to pin their hopes on that happening and having plans in place as early in this year as possible.

What is IR35?

IR35 is a piece of legislation designed to tackle tax avoidance from ‘disguised employment’ – where self-employed contractors set up limited companies to pay themselves through dividends, which are not subject to National Insurance.

From April 2021 private sector firms will have to check whether contractors need to pay income tax and national insurance contributions, shifting the responsibility for conducting such checks from the contractor to the organisation using their services.

Why was IR35 delayed?

When the Coronavirus pandemic originally started in 2020, the Government introduced additional measures to help businesses and individuals deal with the economic impact of the coronavirus. This included an extension of the IR35 off-payroll introduction deadline for large and medium-sized private sector businesses, which saw it postponed until 6 April 2021.

Will IR35 happen in 2021?

But now this extended deadline is rolling around again, and we find ourselves still amidst worrying high levels of coronavirus cases and deaths, many had questioned if the deadline will be extended again.

The current gov.uk guidance does not indicate there will be a further extension. It is very clear in its information which states: “The changes to the off-payroll rules were due to come into effect on 6 April 2020. This has now been delayed until April 2021 because of the spread of the coronavirus (COVID-19) pandemic. The delay is to help businesses and individuals deal with the economic impact of COVID-19. The delay to the introduction of the changes is not a cancellation.”

Can we request for Government to delay IR35?

A petition was launched last year to delay implementation of IR35 legislation reform until COVID-19 is resolved. The petition argues that freelancers play a vital role in the UK economy and are the changing face of work. It requests the Government delays the implementation of the upcoming IR35 legislation until COVID-19 is eradicated and the economy recovers to a level where such a change can be better addressed by all. The petition is still live but has been met with an unequivocal response.

What IR35 help is out there for hiring managers?

We have created an IR35 Hub which will give you access to:

·       Designated IR35 Account Manager

·       Free SDS tool access

·       Free webinars and training

·       360 support in assessing the best options for your business

If you would like one of our team members to get in touch, please email ir35@themcggroup.com.

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