IR35 pause

What has the IR35 pause done to help contractors?

Written on June 3, 2020 by Jonathon Webley

The Coronavirus / COVID-19 pandemic is at the forefront of everyone’s mind at the moment – and especially so for business owners. At the end of March, Chancellor Rishi Sunak unveiled the Government’s plans to financially support businesses during Coronavirus (COVID-19), these include: employers being able to claim for employees’ wages through the Coronavirus Job Retention Scheme, companies being able to defer VAT payments and even two new Business Interruption Loan Schemes for small and medium-sized and large businesses.

But what about IT Contractors? What has been done to help them?

Well, on the same day that Sunak announced all of the things that the UK Government was planning to do to help employers, Steve Barclay (Chief Secretary to the Treasury) stood in Parliament and said: “The Government is postponing the reforms to the off-payroll working rules, IR35, from 6 April 2020 to 6 April 2021.”

He went on to say that the delay in the reform was in “response to the ongoing spread of COVID-19 to help businesses and individuals” but repeated that it would still go ahead as planned the following year.

He added, “this is a deferral, 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 tax as those employed directly.”

So, where does this leave contractors?

Well, although many businesses initially welcomed the announcement of a delay in the IR35 reforms, it is generally believed to have been a little late in the day for such a decision. Many businesses have already laid off contractors or abandoned projects in readiness for the rules coming into force at the beginning of April this year.

The announcement seems to have left a lot of contractors reeling, actually, as it came around two weeks before IR35 was due to begin. Many companies had already completed the work they needed to do, reviewed their workforce, put determinations in place and even banned personal service companies (PSCs). It would seem to be a bit of a waste of time for this work to be undone now, only to have to redo it again in the lead up to the deferred implementation date of April 2021.

What it does do, however, is give people the time to review the decisions they have made and revisit what the reforms will mean for them. Looking at it from a positive viewpoint, this delay to the IR35 implementation date gives both contractors and companies the change to fully prepare themselves for the new rules when they do finally come into effect.

For any further information on IR35 and what the pause means for both businesses and contractors, please email our Managing Director, Jonathon Webley at j.webley@agilerecruit.com

Contractors: We are still recruiting for job opportunities with many of our clients at this time, especially for data roles which are business-critical. We are also working closely with them to ensure their interview processes are aimed at protecting candidate health.

Businesses: If your company needs advice on how to adapt your recruitment process during this difficult time, please get in touch with us.