IR35 tax reforms have been put on hold for a year to help companies battle through the coronavirus pandemic.
The Chief Secretary to the Treasury, Stephen Barclay, said the deferral was 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,” he added.
Under IR35, large and medium-sized haulage companies with a net turnover of more than £10m, or with 50 or more staff will not be able to take on drivers that work as limited companies.
Instead, drivers will need to be employed as a PAYE worker - either by the haulage company or the driver agency, or through an umbrella company.
The reforms have been criticised by driver agencies and self-employed HGV drivers.
A recent white paper from driver recruitment specialist Driver Require explained how IR35 would force agency drivers currently operating as limited company contractors to move to PAYE.
Maintaining these drivers’ net pay - as well as maintaining agency margins, paying tax and NI contributions - will effectively raise agency labour costs by up to 25%, which will raise the cost of temporary drivers to the end client by around 20%.