IR35 has been delayed; Some respite amongst the Coronavirus chaos.March 18, 2020
As the UK enters a period of lockdown due to Covid-19, the government has announced a 12-month delay to the IR35 regulations, which were due to come into force next month. All across the UK, contractors are breathing a slight sigh of relief.
In a nutshell, IR35 is legislation that aims to clamp down on tax avoidance by contractors 'disguised' as employees, ie. working in organisations on a long-term basis and essentially providing an equal service to permanent staff. By forcing companies to pay NI and PAYE for contractors, the legislation will make it far more costly for companies to keep self-employed people on their books, resulting in a massive reduction of contracts available for the freelance population.
As businesses brace for the storm of uncertainty coming down the track, this is a much needed win for the self-employed. It will allow contractors to focus their energy on the wider challenges set to impact society, without having the extra burden of these rules hanging over their heads.
Although the Government has insisted that this is very much a delay and not a cancellation, we are excited by the prospect that contractors can continue to earn good day rates without falling inside the rules. As the economic situation becomes increasingly precarious in the midst of coronavirus, this gives contractors room to breathe and time to properly prepare for the IR35 changes now due in April 2021. It also gives affected firms time to initiate reform in ways that work for them and the freelancers they hire.
As ever, we're here to support your needs as a contractor. As you look ahead to another year of contracting, think about making the switch from your expensive accountant (or the trials and tribulations of managing your books yourself) to a system that automates your accounting and tax. Or if you're now in the position where you're thinking of making the plunge in to accepting a contract, we can help you set up your business.
Ember is a software that makes running a business easy and intuitive for anyone: we automatically categorise your transactions, bringing them into one central feed and show you your real-time tax position at all times so that you're never surprised when the taxman comes knocking.