Changes to the off-payroll working rules (IR35) have been delayed for 12 months.
The changes, which were due to come into force from April 6, 2020, have been postponed due to the outbreak of Coronavirus.
IR35 rules apply for workers who provide a service to a business, but aren’t actually employed by that business, for example directors of contractor-style limited companies.
Providing services through an intermediary, the worker will have his/her own personal service company.
The IR35 rules ensure that the worker providing a service through an intermediary such as a limited company pays ‘broadly’ the same tax and National Insurance contributions as they would if they were employed.
Under the current rules, if the worker is carrying out work through an intermediary for a customer in the private sector, it is down to the worker to determine their own status.
The government pledged to change the rules so that all medium and large-sized private sector businesses will be responsible for deciding on a workers status.
However if a worker is carrying out work through an intermediary for a small customer in the private sector, the worker will remain responsible for his/her own status.
“This announcement has come as a bit of a shock,” said Nick Charnley, tax manager at Ellis & Co Chartered Accountants and Business Advisers.
“However, it is a welcome relief for lots of contractors.
“The government will only be postponing the changes, which will come into force in April 2021, so you will need to be prepared for the changes then.”
For further information on this or any other tax matter contact Nick on 01244 343504.