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Will IR35 reform actually be introduced in 2021?

Is there a chance that IR35 reform will be delayed again?

Q. Whilst I’m aware that changes to the off-payroll tax were postponed recently as a result of the Coronavirus pandemic, I’m slightly confused as to whether the reforms are still pencilled in for April 2021. I’ve read that the Treasury is intent on making sure IR35 reform is introduced next year in the private sector, but has this been officially confirmed? Or is there a chance that it will be delayed further? 

As things stand, IR35 reform in the private sector will be rolled out on 6th April 2021. On this date, medium and large businesses will become responsible for administering the tax status of contractors. As part of this reform, the risk will transfer from you, the contractor, to the party whose job it is to pay you (either your client directly or the recruitment agency that placed you).

In recent weeks, there has been some debate regarding whether the changes will be introduced next year, with David Davis MP tabling an amendment to the Finance Bill that called for a further two-year delay. However, this proposal was all but ignored by the Government, with MPs not even getting the chance to vote on it after Mr Davis’s amendment wasn’t selected by the House authorities. 

This meant the proposed 2021 introduction was passed in the House of Commons without division. As a result, the Finance Bill is one step closer to being signed off and confirmed. While the Bill will be reviewed twice more in the coming months, there has been nothing to suggest that the Government will reconsider its position or that MPs overall do not support the changes. 

So to recap, the Finance Bill is progressing as planned through Parliament, with the April 2021 reform included. As mentioned, the Bill will be considered again in due course, at which point MPs will have the opportunity to contest the changes. 

Whilst a growing number of MPs from several parties have voiced their concerns regarding the legislation and the proposed changes, the Government seems hell-bent on ensuring that IR35 reform – which is short-sighted and needless – is enforced in the 2021/22 tax year. 

With this in mind, contractors are advised to prepare for the changes. While it seems likely that you will lose the right to decide your own tax status next year, you are advised to ensure your IR35 compliance in the coming months. Additionally, if your client hasn’t discussed the changes with you yet, stress the importance of them prioritising well-informed IR35 assessments and avoiding blanket-decisions.

This answer was provided by IR35 specialist, Qdos Contractor.

By Contractor Doctor

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2 thoughts on “Will IR35 reform actually be introduced in 2021?”

  1. Steve

    WHY can’t I be self employed ? If I use my limited company as an agency i.e. my main agency pays “my agency” and then “my agency” pays me self employed IR35 is no longer ?
    Reason companies won’t use self employed is after two years they can become liable for the self employed tax if its not paid.. Whereas my idea removes that risk as “my agency” and self employed is my liability.

  2. KAMLESH T MISTRY

    I been permanent for years of my life and gained 30 years of experience. worked my whole life for peanuts and made big companies rich would tax avoid anyway they can. I work lots of hours in my life time for free and still been made redundant.

    I finally can offer my services as a business to people that require knowledge people that can do the work without a large learning curve and that are flexible. Why can I run as a business. I don’t officially work for someone and they can cancel my contract anytime.

    The system stinks when I have a mortgage to pay and that has large interest on it. I have to work from home and use my own resources to provide my services just like a business.

    I get no perks of being a permanent employee. However I have to pay extra tax.

    Why not tax the bigger companies correctly.

    Im older now and cant work as hard as i used too. My pension is going to be rubbish my time im 70. I still have kids education to pay for.

    We deserve a chance to have a lil bot more so we can make our old age comfortable. Who know what our healths going to be like in the future. If we have to pay to be in a home.

    How are we going to afford it if we do have to go into a home.

    Lifes so taking that we hardly get a chance to save any money.

    Somethings wrong somewhere.

    As experts in our fields we should be allowed to run as a business. Why we getting penalised for it?

    Thanks

    Kam

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