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Off-Payroll Tax to go ahead in April 2020 despite review, announces Treasury

Government has today announced a review the Off-Payroll Tax but will not postpone the April 2020 implementation of the legislation in the private sector, the Treasury has announced.

‘The review will determine if any further steps can be taken to ensure to smooth and successful implementation of the reforms, which are due to come into force in April 2020’, reads a published statement from the Treasury. It also notes that the review will assess whether additional support is needed to ensure that the self-employed outside of the scope of the rules aren’t impacted.

“The announcement of this review was a clear opportunity for the Treasury to rule out delay of the new Off-Payroll Tax,” comments ContractorCalculator CEO Dave Chaplin.

“The fact that the proposed April 2020 rollout is going ahead while the legislation is under review suggests that this Government doesn’t have the best interests of the freelance sector and indeed UK Plc at heart.”

No delay to Off-Payroll timeline

Speaking this afternoon, Financial Secretary to the Treasury Jesse Norman stated: “We recognise that concerns have been raised about the forthcoming reforms to the Off-Payroll working rules. The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible.”

This afternoon’s announcement marks a disappointing turn in the Off-Payroll saga, after the Chancellor initially promised a review of IR35 in November 2019, during the build-up to the General Election.

This pledge didn’t feature in the Conservative manifesto and was met with scepticism by much of the contracting sector due to its timing. As a result, the decision not to halt the proposed changes until further notice is somewhat unsurprising.

Treasury announcement ‘telling’, but there’s still time for contractors

But whereas Government has missed an opportunity to back the freelance sector and UK plc, there is still time for it to soften the blow, as Chaplin highlights:

“We know from our Stop the Off-Payroll Tax campaigners that the Chancellor of the Exchequer has been heavily lobbied on this by his own concerned MPs, so the fact a delay wasn’t announced today is telling. There may still be the opportunity to tinker around the edges, perhaps to soften the blow for firms, but for now, firms should start preparing immediately.

“Pushing ahead with this contract jobs-killing measure is insane. As we leave the EU, reliance on a flourishing flexible workforce will be vital – yet the Chancellor has decided to pour glue on it.”

Despite the Treasury’s announcement, Chaplin insists that it isn’t too late to prevent a damaging fallout come April, and calls on affected contractors, clients and intermediaries to contact their MPs to add to the considerable Parliamentary opposition to the Off-Payroll legislation:

“All parties likely to be affected by the new Off-Payroll Tax should urgently write to their MP and the Chancellor and request a delay, explaining the impact it will have on their business.”

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Published: 07 January 2020

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