David Cameron and the Conservatives are not supporters of the UK’s hard-working contractors, who have faced an ever growing regulatory burden since the Conservative Party formed a Government.
In a video address to attendees at a recent conference held by the Association of Independent Professionals and the Self Employed (IPSE), the Prime Minister rallied: “Let’s continue to back the self-employed. Let’s make the right decisions for our future, and let’s be proud of the sole traders of this great nation.”
IPSE does a fine job of lobbying for the contracting sector, but it can be hard to maintain healthy relations with those you’re trying to bring round to your way of thinking whilst openly criticising them – so we figured we’d do it for them.
Sorry Mr Cameron, but no tactfully crafted speech - nor your use of the ‘rule of three’ - is going to cover up the fact that the contracting sector is worse off now than it was when the Tories came into power.
“I believe there’s a lot more we can do to support you. That’s why, in the last Budget alone, we pledged to eliminate your Class 2 NICs and gave a £1,000 tax break to those of you who sell or rent online,” Cameron continued.
It’s a good job for his sake that he only went as far as the last Budget, because he wouldn’t have had much to say prior to that. Either way, the perks highlighted by Cameron pale in comparison with the measures introduced in recent years that have served to increase costs and restrict means of engagement for contractors.
Overall, the 2016 Budget may have been a relatively harmless one from a contractor perspective – which makes a change – but it also brought with it the very real threat of future IR35 reforms.
We’re all well aware of the upcoming Government consultation on plans to issue public sector contractor clients with the responsibility of determining a contractor’s employment status. We’re also aware that this will inevitably leave many contractors falsely accused of being caught by IR35 by their risk-averse clients. And we’re all aware that a private sector roll-out very well may follow.
The Government does at least appear to be following through with one of its pre-election promises in reforming IR35 – after the House of Lords deemed it unfit for purpose – though this is pretty much the polar opposite of what the contracting sector had in mind. If the Prime Minister is considering more ways in which he can help contractors, he could start by simply leaving them alone.
Let’s not forget the dividend tax hikes that cost limited company contractors significant amounts of extra tax. A 7.5% increase in each tax band is pretty steep, and is set to cost contractors roughly £1,700 more in tax each year.
Yet the Government justifies this as a legitimate means of clamping down on ‘tax motivated incorporation’ and ‘levelling the playing field’ between contractors and employees.
One area where it truly could be said that ‘levelling of the playing field’ is occurring is between the contracting trading vehicles, as umbrella contractors have felt the wrath of Government policy in equal measure as limited company contractors.
First the Agency legislation came into effect in April 2014. As a result, contractors who provide their services to a client via an agency, and are deemed to be under ‘supervision, direction or control’ (SDC), are now forced onto the payroll and pay tax as employees, but enjoy few genuine rights and benefits as a result.
More recently, the Government has decided to use the same loosely defined ‘SDC test’ to withdraw travel and subsistence (T&S) expenses tax relief from the majority of umbrella contractors – rounding off a double whammy.
And yet we are led to believe that things would have been worse under Labour. We’re not so sure. Whilst the Tories continue to tighten the purse strings, contractors are amongst the worst affected.
Finally, with the EU referendum looming, Cameron warned that leaving Europe poses the biggest risk to our economy. The Tories are doing a pretty good job of that on their own by hampering the flexible workforce.