Sajid Javid IR35 Policy – He’ll Make It Fairer and Simpler for Contractors

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Sajid Javid IR35 Policy
Sajid Javid IR35 Policy

Sajid Javid IR35 Policy

What will the new Chancellor Sajid Javid IR35 Policy be? That is the massive question for contractors. Will he carry out Chancellor Philip Hammond’s policy of rolling out the IR35 reforms to the private sector? Or will he scrap or amend the IR35 changes due next April? We’ll look at what he has said on IR35 below.

  • Who is the new Chancellor Sajid Javid?
  • What does he know about contractors and freelancers?
  • What are the Sajid Javid IR35 Policy Statements previously?
  • What was the outcome of the Sajid Javid IR35 Policy discussion with David Morris?
  • Will Sajid Javid Scrap or Amend IR35?
  • What do Contractors Group IPSE want from him?

Who is The New Chancellor Sajid Javid?

He was born in Rochdale, Lancashire and studied for an Economics and Politics Degree at Exeter University. So, at least he knows something about economics – unlike the last few Chancellors. He went into banking and rose to become the Managing Director at Deutsche Bank.

He was Economic Secretary to the Treasury and Financial Secretary to the Treasury before becoming Home Secretary.

What Does He Know About Contractors and Freelancers

It would have been better if he had a period of freelancing on his CV but in that role of Managing Director at Deutsche Bank he would know how the flexible contracting market works. He would have hired many contractors on his way up to Managing Director there.

As a banker he would know how important the bank’s computer systems are to the company. He would also know how important a flexible contractor market is and how it operates. Deutsche Bank was an avid hirer of contractors in his time at the company.

He was earning £3m a year at Deutsche Bank when he quit to become an MP. He took a pay cut of 98% to do so. So, he is fairly well qualified to be Chancellor – and he knows the freelancer market from being a user of them.

What Are the Sajid Javid IR35 Policy Statements Previously

He hasn’t said anything recently about IR35 but here is an exchange with David Morris in the House of Commons in 2015. David Morris was the Self Employment Ambassador to the Government at the time. Maybe he still is. Sajid Javid was the Secretary of State for Business Innovation and Skills.

David Morris

What steps is he taking to simplify regulation for self-employed people?’

Sajid Javid

The enterprise bill will help save businesses 10 billion pounds through further deregulation. We have committed to launch a review into tackling the specific challenges that are faced by the UK’s 4 ½ million self-employed.’

David Morris

‘I thank my Right Hon friend for that answer. As the self-employment ambassador IR35 is constantly cropping up amongst the self-employed people who are writing to me. Could we meet at some point in the future to see how we could simplify this?’

Sajid Javid

‘Can I first thank my hon Friend for the work he has done and continues to do as the self-employment ambassador? I would be delighted to meet with my hon friend and discuss how we can make the system fairer, quicker and simpler for the self-employed. He will know that the tax policy in particular is an issue for the treasury and it will be something I will bring to the attention of my hon friend the financial Secretary’.

What Was the Outcome of the Sajid Javid IR35 Policy Discussion With David Morris

The answer to that is that we don’t know. We don’t know what caused the question to be asked in the first place. We do know that nothing good came from it. Soon after that it was announced that new IR35 reforms would be rolled out in the public sector in 2017. And now they are to be rolled out in the private sector in 2020 too.

However, this is mainly, David Cameron’s, George Osborne’s Theresa May’s and Philip Hammond’s doing. The latter two said “It is an anomaly that a self employed person earning £100,000 a year pays less tax than an employee earning £100,000 a year”. An economics graduate and Managing Director of Deutsche Bank would know how economically illiterate that statement is.

Will Sajid Javid Scrap or Amend IR35

He is unlikely to scrap it altogether – although that is possible. He is charged with implementing Boris Johnson’s pledges on the police and on the NHS which will cost a lot of money. If he did scrap IR35 he would have to find the money somewhere else.

However, it is possible that he might amend or delay the IR35 reforms due to hit the private sector in April 2020.

What we do know is that he believes that IR35 should be made “fairer, quicker and simpler for the self-employed”.

We will have to wait to see what that means in practice. We will know more in the Autumn Budget. Meanwhile contractors’ groups should lobby like hell.

What Do Contractors Group IPSE Want From Him

According to Chris Bryce, CEO of contractors group IPSE “Sajid Javid is a strong appointment as Chancellor and we very much look forward to working with him. We know Mr Javid understands the needs of freelancers, saying only a few weeks ago that ‘bureaucracy and paperwork are stifling the growth of our small businesses’.

“He faces some tough challenges but an easy early win would be to boost the innovative microbusinesses that make Britain globally competitive. This means scrapping the massive bureaucratic drag and damage of IR35 and the retrospective loan charge, simplifying the tax system and supporting freelancers with a fair system of parental leave.”

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