Government has announced a last-minute postponement to the implementation of the off-payroll working rules to the private sector in light of the recent Covid-19 outbreak, with the legislation now due to be reintroduced in April 2021.

The decision was taken following significant pressure from contractors and campaigners - and indeed from within the House of Lords - who warned that the inevitable loss of work due to the virus for contractors deemed ‘inside IR35’ and effectively forced into ‘zero rights employment’ would prove catastrophic.

“This is a deferral in response to the ongoing spread of Covid-19 to help businesses and individuals,” announced Chief Secretary to the Treasury, Steve Barclay MP to the House of Commons. 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.”

Though Government has stated its intentions to legislate next year, contractors, clients and industry stakeholders will no doubt welcome the valuable time granted by the tragic circumstances. The announcement presents significant scope for greater consideration of the ill-considered measures, and further discussion over the alignment of employment status for tax and employment rights purposes, to combat the issue of ‘zero rights employment’ that off-payroll threatens to escalate.

“We warmly welcome the announcement that the Government has seen sense and delayed the damaging IR35 Off-Payroll Tax roll-out for a year,” says ContractorCalculator CEO Dave Chaplin. “With contractors facing the prospect of losing work with no sick pay, it was clearly the right and sensible thing to do."

The delay in introducing the legislation in the private sector is of no help to public sector contractors who continue to face being deemed 'inside IR35'.

 

Noel Guilford