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Gearing up (again) for IR35 in the private sector
2020 has thrown a lot at everyone. With the wide social and economic impact of the pandemic, the government delayed the implementation of IR35 reform in the private sector by 1 year, a decision which was broadly welcomed.
The planned changes will now be introduced from 6th April 2021 – and that isn’t very far away.
Overview of what’s changing
From 6th April 2021 every large and medium private sector business in the UK will be responsible for setting the employment status for tax of workers supplying their services through a limited company.
In addition, liability for unpaid PAYE tax and NIC will shift to the party paying the limited company; that may be the client, recruitment agency or third party engager.
These changes were due to come into effect from 6th April 2020, but were delayed by a year because of the coronavirus pandemic.
Will IR35 be delayed again? The answer is no.
The reason is because it is already law. The Finance Act 2020 reached Royal Assent on 22nd July 2020. This meant that the updated Chapter 10 of ITEPA entered Primary Legislation.
The only way it could have been changed is if either:
A new Budget resolution before April 2021 made changes – this can’t happen because there is no Budget.
Or
An amendment of the law resolution was tabled, allowing MPs to table amendments to the Finance Act outside of the Budget resolutions – this has not happened for years and is highly unlikely to now.
So like it or not, the statute is in place; there won’t be a further delay.
If you engage limited company contractors (aka Personal Service Companies or PSCs), now is again time to ramp up your preparations.
FREE IR35 Factsheet
We have produced a factsheet explaining IR35 in simple terms, and what’s changing. Click below for this free download, and feel free to share it with your colleagues, contractors and clients.