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COVID-19: UK Government Postpones IR 35 Reforms until 6 April 2021

By Nic Hart & Liam Hutton

19.03.2020

As part of the UK Government’s emergency measures to tackle the effects of the coronavirus crisis on the UK economy, it announced on 17 March 2020 that the implementation of new regulations subjecting ‘medium and large’ companies to the off-payroll working rules have been postponed until 6 April 2021.

The Reforms

In July 2019 the Government published draft legislation to the effect that from April 2020, the IR 35 rules would no longer apply where ‘medium and large’ companies in the private sector contract with personal service companies for the provision of workers’ services.

However, this implementation date has now been moved to 6 April 2021 as part of the UK Government’s financial measures in light of the coronavirus crisis.

When eventually implemented, the effect of these changes will be that the IR 35 rules, which place the obligation to assess employment status and operate payroll if appropriate with the personal service companies rather than end user companies, will no longer apply to those entities regarded as ‘medium and large companies.’ Consequently, these end user companies will be subject to an obligation to account for tax and national insurance for workers engaged via a personal service company through PAYE under the off-payroll working rules from 6 April 2021.

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