Extension of IR35 Postponed

19 March 2020

The government has announced that the extension of IR35 to medium and large companies in the private sector is being postponed by a year, to 6 April 2021.

The IR35 tax rules are aimed at making sure that where a contractor who provides their services through an intermediary (often their own limited company) would be considered to be an employee if that intermediary were not used, that contractor is subject to broadly the same tax and National Insurance contributions as employees.

We did wonder if this would happen given the strain this new legislation will put on very many organisations in these difficult times.  It may also give the Government an excuse to review this controversial piece of legislation.  

While this announcement will help our over stretched clients at this difficult time in terms allowing them to focus on the safety of their people and business, we do not believe the time clients have spent in making changes to their consultancy agreements to take account of IR35 is in any way wasted. Many consultancy agreements we have reviewed are out of date anyway and we have been able to incorporate wording that allows for future IR35 changes.

While this announcement has given clients time to put in place the necessary administration and other arrangements that may still need to be made, take care not to put too much on back burner because Government may well not allow any transition next year given the notice we all have of this legislation.

We'll make sure to keep you updated with the latest developments regarding IR35. In the meantime, if you have any questions please don't hesitate to get in contact using the form below.

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