With only a week to go until Philip Hammond’s first Autumn Statement we wait with bated breath to see what the new chancellor will announce on Wednesday November 23rd and how his offerings will impact the UK’s contract workforce, writes Victoria McDonnell, a manager at contractor accountancy firm Brookson.
This year, the Autumn Statement is set to be a pinnacle moment for the new government, as the Tory administration is known to be keen to roll-out its vision for the economy post-Brexit and; dare we mention something even more divisive, post-Trump.
But if it was up to the estimated 1.4million contractors, freelancers and self-employed professionals in the UK, a chunk of whom are our clients, Autumn Statement 2016 would be more granular and less ‘big picture.’ From talking with them, we know that these independent workers want less red tape, more legislative clarity and initiatives or tax rate changes able to genuinely benefit professionals who work via a PSC or umbrella company.
IR35 Public Sector Reform
Limited company contractors tend to hope that this reform is going to be shelved indefinitely or at least delayed, and many PSCs will want to hear either decision on Wednesday. Should the reforms be implemented from April 2017, the least contractors deserve is properly thought-through changes to ensure those of them working in the public sector who are outside of IR35 are not unfairly penalised.
Confirmed investments in crucial infrastructure projects like housing, road and rail are desirable for contractors across a range of industries, not just IT. It would be a boon for independent professionals who work in these sectors and for many more freelance consultants who have to travel frequently as part of their work.
In a speech at the Tory party conference in Birmingham in October, chancellor Hammond hinted that investment would indeed be a major cornerstone of his strategy, by saying: “Our stock of public infrastructure – like our roads, railways and flood defences – languishes near the bottom of the developed-countries’ league table after decades of under-investment.”
Wednesday’s an opportune time to bring forward recommendations made in the Deane review into self-employment. Although it might not impact PSC workers directly, they will be happy that their sole trader counterparts (which PSCs can dis-incorporate and become), are going to be better supported on the challenges they face. For example, it could mean action on maternity pay or pension provision for people with unincorporated ventures.
The flexible workforce wants Autumn Statement 2016 to announce new initiatives within the digital sector, as these will consolidate demand for contractors and freelancers. Their expertise and flexibility is vital any time the government wants to deliver digital and project-based work. In the last Budget, the then-chancellor George Osborne announced two £1,000 tax breaks for the ‘gig economy’ related to trading and renting property; his successor would do well to build on these.
Get Britain Building
A commitment from the government to ‘get Britain building’ included enough affordable homes each year to support families on low incomes. This will also offer a further boost to the construction sector – home to many contractors, and would help take the government a significant way to its target of building one million homes by 2020, delivering 80,000 homes each year in England. In their personal lives too, contractors are unlikely to shy away from more housing stock, whether they want they’re eying their first-rung on the property ladder or a new addition to their third buy-to-let portfolio.
As the UK prepares to leave the EU, British businesses need some reassurances that we will do so in a way that protects the British economy; and the chancellor’s statement on Wednesday is a high-profile platform to provide them.
The future of the UK’s trade is currently up in the air with businesses of all sizes across the country waiting to hear some direction. There is also uncertainty around European funding for both local and national projects. The chancellor has a chance to clear all this up.
Cutting corporation tax goes a long way to supporting small businesses, but Mr Hammond has already indicated that he won’t cut corporation tax to 15% to boost the economy following Brexit – as the previous chancellor, George Osborne, had pledged. Unfortunately for contractors, Hammond has reportedly told European finance ministers that he is sticking to a previous plan to cut the rate to 17% by 2020; but a tax cut is still on most contractors’ wishlists.
Aside from some specific contractor measures on Wednesday that PSCs want announced or abandoned, the sense from our clients is that there is a need for AS 2016 to be small business-friendly, in general. If the focus on independent enterprise is there, the chancellor will be sending a signal that he knows it is important to keep encouraging tiny traders to persevere, profit and potentially expand, hopefully helped on by any new pro-enterprise gestures or initiatives he unveils; if not lower taxes on profits, perhaps an increase in the reliefs and allowances available and, ideally, an overall reduction in the cost of doing business. Over to you Mr Hammond.