March 19th, 2020
The changes to the legislation known as IR35 or off-payroll tax have been put on hold until April 6, 2021 in response to the outbreak of the coronavirus.
The decision was made after mounting pressure from contractors and campaigners. The House of Lords also warned that many people would lose work due to the spread of the coronavirus – specifically those who fall ‘inside IR35’ and could be forced into ‘zero rights employment’. This would leave many contractors out of pocket with no support from an employer.
What is the government saying?
MP Steve Barclay, the Chief Secretary to the Treasury said: “This is a deferral in response to the ongoing spread of Covid-19 to help businesses and individuals,”
“This is a deferral and not a cancellation, and the Government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company pay broadly the same amount of tax as those employed directly,” he added.
See the full details on IR35 here: https://www.gov.uk/topic/business-tax/ir35
The delay in implementing IR35 across the private sector will give many contractors a chance to keep their finances intact amidst the uncertainty of the coronavirus outbreak. While the circumstances are not ideal, many businesses and contractors will be grateful for the additional time before the new law comes into place. The delay in IR35 will give scope for more consideration into the discussion of tax, employment status and employment rights.
Mike Coshott, CEO at CMME, commented on the changes.
“The Government announcement is welcome news given the challenges facing our clients in the coming months. At this time it’s vital that advice is sought early prior to any financial shocks that might manifest themselves. Whether it’s restructuring your mortgage, setting up or reviewing financial protection policies, or utilising tax breaks via financial planning; CMME is set up to deliver these services remotely regardless of where you live in the UK.”
Mortgage payments during the ongoing outbreak
If you already have a mortgage, contingencies have been implemented by lenders to assist those who may struggle during this time. You can read more about that in our recent Mortgage Holiday News