It’s likely that freelancers and contractors are wondering if the re-elected Conservative government will deliver this year on the promises made to independent professionals in the lead up to last December’s general election.
We can at least be certain of one thing: that the Conservative’s landslide general election win does put the government in a strong position to ‘Get Brexit Done’ – the tagline that propelled the party to its biggest majority since 1987.
However, what is less clear is how supportive the government will be towards freelancers, contractors and the self-employed who, according to IPSE, contribute a staggering £305bn to the UK economy every year.
The Conservatives made some of the right noises in the party manifesto and soon after the general election addressed the elephant in the room that is IR35. But what else specifically can contractors expect from the duo of Boris Johnson and Sajid Javid this year?
IR35 is being reviewed
It didn’t go unnoticed that IR35 wasn’t present in the Tory Manifesto, but not long after its release, the Chancellor pledged to hold a review into IR35 reform. Then on 7th January, the government launched the review, which will remain open until mid-February as specialists discuss the impact of reforms.
However, as it stands, on 6th April this year, contractors will lose the right to decide their own IR35 status unless they are engaged by a ‘small’ private sector firm. Similar to public sector changes, medium and large private sector companies will become responsible for this.
Review of self-employment to be held
The government will open another review, this time to explore how it can better support the UK’s 5 million self-employed people. Part of this consultation will include the IR35 review, as explained above, but the Conservatives also intend to focus on several other areas, including; how independent workers are able to better access finance and credit (not least mortgages), making the tax system easier to navigate and exploring ways better broadband can allow for home working.
For example, the government plan to roll out full-fibre and gigabit-capable broadband to every home and business in the UK by 2025. To make this happen, the Prime Minister will invest £5bn of public funding.
A fairer tax system?
The Conservative Party has said it will build a tax system that “rewards entrepreneurship and punishes evasion,” before going on to explain in its manifesto that it will “tackle tax evasion and reduce opportunities for aggressive tax avoidance.”
Specifically, the government has highlighted the importance of major multinational companies paying their fair share of tax – something the UK’s smallest businesses have long called for.
Late payment to be scrutinised
The association for the self-employed, IPSE, say late payment in creative industries leaves freelancers a staggering £5,400 per year worse off on average. But as you might well know, this is an issue that extends right across the entire freelancer and contractor market.
In a positive move, the government has said it will “clamp down” on late payment and hand the Small Business Commissioner further powers to support the small businesses that are “exploited” by their larger clients.
Entrepreneurs’ Relief faces reform
Entrepreneurs’ Relief is a tax-break which reduces the Capital Gains Tax freelancers and contractors would need to pay should they sell or dispose of shares in their business. It often affects contractors who are closing down their limited company.
The government doesn’t believe Entrepreneur’s Relief is working to its full potential and has said it will “review and reform” the rules. Granted, this doesn’t give us much to go off right now, but the future of Entrepreneur’s Relief looks uncertain, to say the least.
While many of the pledges made by the Conservatives lack the fine detail at this stage, freelancers and contractors won’t need to wait long to find out if the government will introduce real change, given it has now been confirmed that the Chancellor will unveil the Budget on 11th March.