[UK] Off-Payroll Working Reforms Delayed To Tax Year 2021/22

24 MAR 2020

As part of the government’s response to the Covid-19 coronavirus pandemic, Stephen Barclay, Chief Secretary to the Treasury made an evening announcement in the House of Commons on the 17th of March 2020 postponing the roll-out of off-payroll reforms to medium and large private sector employers until April 2021. 

The following day, a news story appeared on gov.uk confirming this.  On the 19th of March, software developers were advised the following, as advised by the Off-Payroll Working Programme:

The Government has announced it is delaying the reforms to the off-payroll working rules (IR35) from 6 April 2020 to 6 April 2021.

This deferral has been announced in response to the ongoing spread of Covid-19, to help businesses and individuals deal with the economic impacts of the pandemic. This is a deferral of the introduction of the reforms, not a cancellation.  

The Government remains committed to introducing this policy to ensure that people working like employees, but through their own limited company, pay broadly the same tax as individuals who are employed directly.. The policy will be introduced on 6 April 2021, representing a 12-month delay.

Due to this delay HM Revenue and Customs will be pausing the customer support and education programme that HMRC has been delivering to help customers get ready. HMRC will resume education and support activities at the appropriate time ahead of the reform in April 2021.

This deferral means that the current off-payroll working rules in the public sector, introduced in 2017 will continue to operate as they do now. Public authorities will not need to implement the changes on status determination statements or implement status disagreement processes until April 2021. Customers can refer to existing guidance on the current rules for public authorities for more information: https://www.gov.uk/guidance/off-payroll-working-in-the-public-sector-reform-of-intermediaries-legislation.

HMRC developed a wide range of guidance and support to help customers prepare for the changes, which are now delayed. These products will be updated shortly and remain available to access to help you prepare for the changes due in April 2021.

We’d be very grateful if you would share this with colleagues, clients and members who may be affected, so they are also aware of the delay in the implementation of these changes.

Global Payroll Association Comment

As you will be aware, the Global Payroll Association has been active in promoting and educating employers about the reforms which are now being delayed again.  In light of the Covid-19 pandemic and concerns about the reforms themselves, we are pleased to see the delay.  We will resume our education and resources at an appropriate time.

Note that the rules have not changed for the public sector where off-payroll still operates.  Though they will not have to bear the additional burden of issuing Status Determination Statements and undergoing disagreement processes.  Further, the new RTI field (208) “Off-Payroll Worker Subject to 2020 Rules” will not have to be completed.