Treasury Chief Secretary Stephen Barclay MP told the Commons last night that the new rules, due to be introduced in April, would be put back a year.
The off-payroll rules apply to self employed contractors working for firms. They already applied to public sector contractors but were due to apply to private sector contractors from next month.
Mr Barclay told the Commons in a debate on dealing with the financial impact of Coronavirus: “As my right Hon. Friend has said, we will do whatever it takes to give the British people the tools to get through this challenge.
“I can also announce that the Government are postponing the reforms to the off-payroll working rules IR35 from April 2020 to 6 April 2021. The Government will therefore not move the original resolution tonight, but will shortly table an additional resolution confirming that we will reintroduce the off-payroll working rules provisions by amending the Bill, with a commencement date of the 6 April 2021.”
He added: “This is a deferral in response to the ongoing spread of Covid-19 to help businesses and individuals. This is a deferral, not a cancellation, and the Government remain committed to reintroducing this policy to ensure that people who are working like employees, but through their own limited company, pay broadly the same tax as those employed directly.”
The IR35 rules were introduced in 2000 with the aim of stopping employees claiming to be freelance contractors to pay less tax.
The move has caused concern for many self-employed contractors working in British industry, including some working as freelance consultants or advisers in financial services.