The controversial IR35 tax reforms have been delayed for a year by the coronavirus pandemic, the Treasury revealed yesterday as it announced an unprecedented emergency £330bn financial package for the UK economy.
Chief secretary to the Treasury Steve Barclay told Parliament: “The government is postponing the reforms to the off-payroll working rules, IR35, from 6 April 2020 to 6 April 2021...in response to the ongoing spread of COVID-19 to help businesses and individuals.”
He insisted the reform would go ahead as planned in 2021. “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,” he said.
Under IR35, medium and large businesses were going to have to set the tax status of contractor and freelance workers. For community pharmacy, this would include locums.
Those workers determined by employers to fall within the scope of the legislation would be subject to the same tax and national insurance treatment as full time employees, although arrangements for other benefits, such as holiday or sick pay and pensions would be unaffected.
The public sector came under IR35 in 2017. The reform remains controversial, in part due to the challenges in implementation to date. The financial package announced by the chancellor of the exchequer included a business rates holiday for businesses, and emergency loans for companies backed by Treasury guarantees.
Gareth Jones, head of corporate affairs at the National Pharmacy Association, said: “We are pleased that Government is postponing the reforms to the off-payroll working rules IR35 from April 2020 to 6 April 2021. This is a sensible response to the ongoing spread of Covid-19. NPA and other pharmacy bodies have long told HMRC that the IR35 changes lack clarity, so it’s good that it’s now on the back-burner”