Although forthcoming tax changes will not currently be a top priority for most employers, a little welcome relief came via an announcement at the end of a parliamentary debate on the Budget. Steve Barclay, Chief Secretary to the Treasury, stated that “The Government is postponing the reforms to the proposed off-payroll working rules from 6 April 2020 to 6 April 2021.” This reflects the turmoil and financial uncertainty that most employers are facing as a result of coronavirus.
Mr Barclay was clear that the proposals will not be diluted and are merely being delayed as a result of the issues caused by coronavirus. The Government is still keen to ensure fairness between contractors working alongside employees but paid through their own limited company. However, the extension of these rules to the private sector has proved very controversial. As well as the additional costs to affected fee-payers and reduced income for contractors, there has been discussion that some aspects of the rules are unfair, too complex and uncertain, particularly HMRC’s online employment status tax tool (CEST) which should, if working efficiently, help employers determine whether or not the rules apply.
The delayed implementation means that all the work undertaken in preparation for 6 April 2020 by end clients, agencies and contractors will still be relevant for next year and the delay will provide time for any new contracts and processes to embed. This announcement means the Finance Bill legislation will be amended to include the new start date of 6 April 2021.
If you have any queries please contact our Employment Taxes team on EmploymentTax@pem.co.uk