Andrew Diver, head of tax at Beatons, offers some good news for those worried about the implementation of Britain's IR35 controversial tax reforms.
The IR35 tax avoidance reform will see every medium and large private sector business in the UK become responsible for setting the tax status of any contract worker they use – and this was supposed to come into force in April this year.
It’s been a worry for many people who are self-employed or those who engage through a personal service company because it is likely to have a very damaging effect on the incomes of many of these contractors.
And it is for this very reason that HMRC agreed to defer the legislation taking effect by a year to prevent further economic fallout for freelancers during the coronavirus pandemic.
The decision was announced among a £330billion financial package for the UK that includes a business rate holiday for some businesses, emergency loans for companies and deferral of some tax payments.
And it recognised that the COVID-19 outbreak meant many contractors were likely to be benched by clients without pay for an undefined period of time.
While it is a deferral, not a cancellation, it is right and responsible to delay the changes to IR35 to reduce the strain and income loss for self-employed businesses, contractors and freelance workers.
We should not expect these reforms to be introduced now until at least April 2021.
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