IR35: Deferred for 12 months
In the United Kingdom's quest to fight the coronavirus (COVID-19), the IR35 tax reforms have been deferred for 12 months.
These reforms will come into effect on 6 April, 2021. The objective of this delay is to help the private sector firms and contractors.
A summary of IR35 reforms:
IR35 was being applied to all ‘medium and large’ size businesses in the private sector. The rules were going to be made consistent to the reforms made to the public sector in April, 2017. The end-client was going to be made responsible for determining whether an assignment was inside or outside of IR35 rules. For contracts inside IR35, contractors are responsible to pay PAYE tax and National Insurance like employees. Right now, the responsibility lies with the contractors. When the changes are implemented, the responsibility for deciding the employment status will sit with the end client.
Small companies were still exempt by the reforms. A ‘small businesses’ as defined by the Companies Act 2006, meets two or more of the following criteria:
1. Annual turnover is no more than £10.2 million
2. Balance sheet total is no more than £5.1 million
3. No more than 50 employees.
All in all, these reforms will now take effect on 6 April, 2021. Moonworkers payroll software allows to service payroll for contractors and PAYE workers alike. We also have plans built specially for different kind and size of the workforce.