The Government has delayed controversial changes to the IR35 tax system in response to the coronavirus pandemic. Due to come into force from April, the changes to the system would have led to self-employed individuals operating through a company paying more tax under legislation known as IR35.

Steve Barclay, Chief Treasury Secretary, announced on 17 March that the legislation is to be pushed back from 6 April 2020 to 6 April 2021. He said:

“This is a deferral in response to the ongoing spread of Covid-19 to help businesses and individuals. This is a deferral and not a cancellation, and the Government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company pay broadly the same amount of tax as those employed directly.”

The Association of Independent Professionals and the Self-Employed (IPSE) has said that the government has “done the sensible thing” by delaying the changes to IR35 in the private sector.

Andy Chamberlain, Director of Policy at IPSE, said:

“These changes have already undermined the incomes of many self-employed businesses across the UK. However, they would have done even more serious damage if they had gone ahead as planned.

"It is right and responsible to delay the changes to IR35 for at least a year during the Coronavirus crisis, to reduce the strain and income loss for self-employed businesses.

“This is a sensible step to limit the damage to self-employed businesses in this grave and unprecedented situation, but we also urge the government to do more. It must create an emergency Income Protection Fund to keep the UK’s crucial self-employed businesses afloat.”