With the Budget less a week away, we have taken a look at our predictions for the final budget and what we think may be announced and how this may impact the UK’s flexible workforce.

As we are currently in the middle of the best period of economic growth since the financial crisis you would think that there would be room for manoeuvre regarding tax cuts, however, we do not envisage there being any significant cuts given there is still pressure to reduce the deficit and increase tax take to support public sector spending.

New to contracting call to action banner with turning cogs

However, given the impending General Election there will undoubtedly be some good news in the Budget for key voting constituencies such as low earners, savers and the elderly.  We would also expect there to be some new measures announced to incentivise grow in the SME market and to help further stimulate the economy.

We are also expecting the Chancellor to continue his theme of tightening the tax system by addressing tax avoidance and increase the ability and speed at which HMRC can collect taxes.  We would also hope that some of the recent work undertaken by the office of tax simplification will come to fruition.

In terms of the flexible workforce, this important part of the UK economy has been recognised in recent Budgets and we hope that the Chancellor continues to give due consideration to encourage its continued growth and prosperity.  This population could be viewed as a key vote winner and we hope that there are some positive or at least neutral announcements to ensure there is no disruption to the flexibility of the UK’s workforce.

Brookson established in 1995 join or switch call to action banner with turning cogs and animated finance icons

That said the recent project undertaken by the Office of Tax Simplification (OTS) on the definition of self-employment and employment could result in changes to the way in which employment status is assessed.  The OTS has made a number of recommendations to Government including a joint review by Government departments to agree a code of principles on employment status, improvement to the ESI tool, introducing a statutory employment status test and merging tax and NIC.  We would expect some further commentary on these recommendations in the upcoming Budget.

In addition, we expect there to be an announcement on the tax treatment of expenses for umbrella company employees.  We would anticipate this being a formal consultation process to help inform HMRC on the implications of restricting the tax relief available to these employees and in particular associated anti avoidance measures which may impact contractors.

We will produce a Budget summary guide for contractors and recruitment agencies which will be available following the announcement on 18 March.

New to contracting call to action banner with turning cogs and orange button