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Relief for self-employed

IR35 contractors tax rule change delayed for a year

Stephen Barclay: a delay not a cancellation

A controversial tax reform on contractors is being delayed by a year as the government eases pressures on businesses trying to cope with the coronavirus.

The change to IR35 will clamp down on tax avoidance in the private sector by targeting contractors who are, in practice, providing the same service to a company as employees.

Despite pressure from the business community for further changes, Chancellor Rishi Sunak announced in last week’s Budget that the reform would be introduced as planned next month.

However, Chief Secretary to the Treasury Stephen Barclay told MPs today that the rule change would now come into on 6 April next year.

Mr Barclay, speaking in during a Commons debate on the Budget, said the change was part of the measures announced to protect the economy from the coronavirus outbreak.

He said the decision was “a deferral, not a cancellation, and the government remains committed to reintroducing this policy”.

Andy Chamberlain, director of Policy at IPSE (the Association of Independent Professionals and the Self-Employed) said: “The government has done the sensible thing by delaying the changes to IR35 in the private sector.

“These changes have already undermined the incomes of many self-employed businesses across the UK. However, they would have done even more serious damage if they had gone ahead as planned.

“It is right and responsible to delay the changes to IR35 for at least a year during the Coronavirus crisis, to reduce the strain and income loss for self-employed businesses. 

“This is a sensible step to limit the damage to self-employed businesses in this grave and unprecedented situation, but we also urge the government to do more. It must create an emergency Income Protection Fund to keep the UK’s crucial self-employed businesses afloat.”

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