Chief treasury secretary Steve Barclay this evening announced that the IR35 tax reforms would be pushed back by one year, less than a week after the controversial measures were confirmed in the Budget.
Speaking at the despatch box in today’s Budget debate in the Commons, Barclay confirmed that the changes, which will clamp down on tax avoidance by targeting contractors for companies who are, in practice, providing the same service as employees, would not go ahead in April as previously expected.
Instead, the measures will come into effect on 6 April next year.
Barclay said that move is part of a broad package of measures the Treasury has announced to protect the economy from the coronavirus outbreak.
He confirmed that the decisions was “a deferral, not a cancellation, and the government remains committed to reintroducing this policy”.
Businesses welcomed the move, with IR35 expert Qdos boss Seb Maley saying that the government had “seen sense”.
Given the economic challenges that lie ahead of the UK, now certainly would not have been the right time to roll out needless tax changes that endanger hundreds of thousands of contractors’ livelihoods.
“That said, this is only a delay, albeit a very welcome one. It does, however, give private sector firms vital time to prepare for reform, which can only be a good thing for contractors. What matters now is that businesses use this time wisely.”
The Budget announcement had been met with anger by businesses, who had pushed back against the reforms.