Some positive news for self-employed workers and their clients this week as the Government postpones changes to the IR35 tax system until 2021.
Speaking in Parliament, Chief Secretary to the Treasury Steve Barclay said: “The Government is postponing the reforms to the off payroll working rules, IR35, from April 2020 to April 6, 2021. This is a deferral in response to the ongoing spread of Covid-19 to help businesses and individuals.”
While this is a deferment and not a cancellation and the Government “remains committed to reintroducing this policy”, this will give both businesses and individuals a reprieve during these challenging times with additional time to prepare.
For businesses, this is a chance to retain flexibility in how they attract and retain talent to implement the strategic and operational changes that they require in the short term. It also provides further opportunity to tighten contracts, carefully consider the outcomes they want to achieve, and how they will be accomplished within the current operating model, in the medium to long term. This will help them to build the optimum pipeline of talent available for when the deferred legislative changes are finally implemented next year.
For those contractors whose status had been determined as inside IR35, by those companies imposing blanket bans, for example, there is potential opportunity to review this determination anew and consider whether or not the most appropriate (and, of course, legislatively compliant) option is to continue on a fixed-term contract (FTC) or seek to revert and continue on an outside IR35 basis.
This should, however, be assessed on a case-by-case basis, and a further nuance is to consider whether the benefits of an FTC style engagement outweigh the financial advantages of continuing as self-employed. We would encourage contractors to discuss this with their client, professional advisers, and/or an interim recruitment specialist to find the best and most appropriate solution for all involved.
While permanent contracts are still dominant in business, in a disrupted environment, interim executives are an indispensable resource for organisations seeking to sustain business success and adapt and change. They bring with them a specific set of skills and experiences and offer significant expertise and agility. In these unprecedented times, we’re confident this decision is a positive step for talented interims and business alike.
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