Finance Bill – MPs vote in favour of IR35 rollout
MPs have voted in favour of amendments to the Finance Bill, which means that IR35 rules will be rolled out in the private sector in April 2021.
Ministers delayed the introduction of the rule changes earlier in the year, as the coronavirus began to grip the economy, and the government was urged to delay the reforms until 2023. However, amendments to the Bill were passed without opposition on 18 June during the committee stages of the Finance Bill's passage through parliament.
This means the private sector reforms have been given the go-ahead to be rolled out in April 2021, one year after they were originally due to be introduced.
The rules are designed to ensure individuals working like permanent employees pay the same income tax and National Insurance contributions, and have been in place for public sector bodies since 2000.
Financial Secretary to the Treasury, Jesse Norman, said the reforms were successful in the public sector, and that the revised proposal has already been altered, taking into account consultations with stakeholders.
However, Seb Maley, CEO of IR35 specialist Qdos, commented that the news is hugely disappointing:
“If mismanaged, these changes pose a real threat to contractors, the recruiters who place them and the businesses that engage them. It’s therefore vital that companies impacted by IR35 reform continue their preparations and ensure they are in a position to make accurate IR35 decisions well in advance of the implementation date.
“Firms yet to consider IR35 need to immediately, while companies that banned contractors in anticipation of the reform need to understand that it can be managed with the right approach.”