Contractors National Insurance Increase
It is almost certain that the contractors national insurance increase will be back on the agenda now that Theresa May has called a new election.
After recommendations from Matthew Taylor, Prime Minister and Chancellor Hammond announced a National Insurance increase for contractors.
The full Matthew Taylor report on Self Employment will come out in June – just after the election.
He is expected to recommend a much stricter definition of self employment. That recommendation is likely to be accepted and taken up by the Prime Minister.
This will result in a stricter tax regime for contractors in the future. Far fewer of them are likely to be able to incorporate in the future.
Contractors Should Watch Conservative Manifesto
Prior to that, contractors should watch the Conservative manifesto.
Prime Minister May and Chancellor Hammond intended to implement the national insurance increase which Hammond announced in his Budget.
However, when backbenchers poited out to them that there was an explicit promise in their manifesto not to raise National Insurance, they dropped it.
However, that doesn’t mean that hey no longer agree with it.
Chancellor Hammond’s Hole in his Budget
Dropping it will mean that the Chancellor will have a £2bn hole in his finances. He said that he would recover this in the Autumn.
Most analysts thought he meant that he would find some other way of getting this £2bn back.
However, he and the Prime Minister maybe knew something that we did not, i.e. that a new election would fix this problem for them.
Expect them to quietly drop the promise of no new NI increases form their manifesto.
No Plans to Increase National Insurance
If asked about it they will say the old ‘we have no plans to increase national insurance’.
However, it is almost a certainty that they will now fill in that budget hole by increasing National Insurance for freelancers as they had intended doing in the first place.
This will make it less worthwhile for contractors to contract.
There are 4.8 million self-employed in the UK.
However, they don’t organise themselves well and don’t lobby very well.
IPSE and Contractors Need to Act Now
If organisations like IPSE want to have an effect on election policies they need to get in quickly, before the manifestos come out.
So, there is not much time.
So, if contractors don’t influence the parties here’s what may well be in store for UK freelancers.
- A big contractors national insurance increase
- A stricter definition of self employment
- Rolling out those public sector IR35 changes in the private sector next year or soon after.
The future doesn’t look great for contractors – unless IPSE and others grasp their opportunity right now.
If you do need an umbrella company you could try one of the following:-
If you want to cut your Accountancy costs by using apps try Aardvark Accounting.
For Mortgages specially designed for contractors try Specialist Contractor Mortgages.