In light of the recent COVID-19 outbreak, the government has announced that the much debated private sector reforms to IR35 will be delayed until April 2021. This decision comes as part of the Budget speech announcement on the 17th of March 2020 where Chief Secretary to the Treasury, Steve Barclay, confirmed that the deferral was intended to help businesses and individuals during this uncertain time.
Between threats of a full UK lockdown and worries about an impending recession, this news about IR35 comes as a small bit of relief as tensions run high for many contractors and employers alike. With the economy facing a potential crisis in the wake of the coronavirus pandemic, it needs all hands on deck to continue to bolster the UK’s business landscape during this turbulent time.
While Mr Barclay assures us that the reform is very much still going ahead, we now have an extra year to continue working under the old off payroll working rules. This also gives HMRC time to improve their processes and ease some of the concerns faced by contractors and employers regarding blanket determinations among other issues.
So, if like us, you’ve spent the last few months preparing for the reform and are keen to understand what the delay to the IR35 changes means for you, keep reading.
What it means for contractors
The decision to defer will massively reduce loss of earnings faced by those who are self-employed. If you’re a contractor, the delay to the IR35 reform means that you’ll be determining your own IR35 status, and won’t need your employer to rely on blanket assessments or the government’s CEST tool.
This should come as a relief as many raised concerns over role-based determinations making it financially unviable for many to continue working on an interim basis. The hope is that by the time April 2021 comes round, the determination will have vastly improved and we’ll have a better idea of what the impact of COVID-19 will be on UK businesses.
What it means for employers
If you’re an employer that regularly utilises contractors to meet your business objectives, then you’re in luck. Under the new reform, you were going to need to assess the IR35 status of every contractor that worked for your business and could potentially be liable to pay NICs and taxes.
Now, thanks to the delay, this responsibility sits back with the contractor themselves. This makes bringing contractors on board a much simpler and more streamlined process, meaning that you can rely on an interim workforce with ease.
This is especially useful given that many organisations will be looking to protect themselves against the fallout that the coronavirus pandemic could cause by relying on business transformation teams to help find a way forward.
What it means to Deltra
In light of the challenges our global economy is set to face because of the COVID-19 outbreak, we feel that the government’s stance on IR35 has shown real pragmatism and will enable thousands of self-employed workers to continue to contribute to the UK’s output.
It will alleviate lots of undue stress and uncertainty and will enable businesses to truly transform and adapt in these uncertain times. Given the experiences of the 2008 global financial crisis, we saw businesses turn to business change and transformation to ensure they were well equipped for the recession that followed.
We expect that change and transformation professionals will be needed now more than ever to enable businesses to weather the storm coming our way, so this delay to the reform is a positive step from our government.
Whether you’re an employer seeking advice on how to go on utilising interim teams, or a contractor looking for information on what this means for your next role – Deltra is on hand to help. Just give us a call on +44 (0)207 375 9500.