The government has postponed reforms to so-called “IR35” rules to April 2021 to ease pressure on businesses in light of the coronavirus crisis.

The changes were likely to cause a headache for some self-employed mortgage brokers.

Government’s aim had been to clamp down on companies that rely on contractors as though they were employees, but keep them off the payroll in a bid to keep down taxes for both parties.

Public sector bodies are already subject to the IR35 rules, which require organisations using contractors to decide whether they should be classed as employed or self-employed.

From April private sector companies were going to have to make such decisions too, potentially resulting in higher taxes for self-employed workers who are deemed to be “disguised employees”.

The crackdown was most likely to affect self-employed brokers who carry out all their work for one company, who are expected to work particular hours and who cannot assign their work to another adviser.

Accountancy firm BDO’s partner and head of employment tax Stephanie Wilson says:  “Yesterday evening, as part of the additional measures announced to support businesses and individuals to deal with the economic impacts of Covid-19, it was announced that the implementation of the Private Sector IR35 Reforms would be postponed until April 2021.

“At this stage there has been little detail in support of this announcement, however the key message is that this is a deferral of the new rules not a cancellation. 

“Once more information has been provided by HM Treasury about the postponement, we will be in a better position to provide a more comprehensive view on the potential impact this change will have on affected organisations businesses. 

“However, it is clear that this further delay to the start date does allow individuals and organisations time to fully prepare themselves for the new rules, including the ability to engage with all relevant parties to effectively implement all necessary change.”