Controversial IR35 tax reforms have been postponed due to the coronavirus pandemic

Chief Secretary to the Treasury Steve Barclay said the move to delay reforms to IR35 legislation was designed to help businesses and individuals, but stressed they had not been cancelled.

Legislation introduced in 2000, referred to as IR35, sought to prevent the exploitation of personal service companies for tax avoidance purposes.

Further changes were expected to be introduced from next month, which led to warnings this would prompt some freelance workers to retire early, find contracts abroad or look for other jobs.

Speaking to conclude the Budget debate, Mr Barclay said: “I can also this evening announce that the Government is postponing the reforms to the off-roll payroll working rules IR35 from April 2020 to April 6 2021.

“Government will therefore not move the original resolution tonight but will shortly table an additional resolution confirming that we will reintroduce the off-roll payroll working rules provisions by amending the Bill with a commencement date of April 6 2021.

“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 remains committed to reintroducing this policy to ensure people working like employees, but through their own limited company, pay broadly the same tax as those employed directly.”

The Stop The Off-Payroll Tax campaign, the contracting sector campaign group against the IR35 Off-Payroll Tax roll-out, has welcomed the news.

Dave Chaplin, Director of the Stop The Off-Payroll Tax campaigm said: “With contractors and freelancers facing losing work with no sick pay, it was clearly the right thing to do.”