Contractors IR35 Vote Choice
With just two weeks till the election all parties will be after the contractors IR35 vote. There are more than 5 million self employed They could be a major factor in the election.Will they go for Boris Johnson, Jeremy Corbyn, Jo Swinson or Nichola Sturgeon?
Contractors will vote on many issues, e.g. Brexit. However, we will concentrate just on issues affecting freelancers in this article.
Questions on Contractors IR35 Vote Choice
- What Do the Conservative Party Offer Contractors on IR35 etc.?
- How did the Conservatives change IR35 in the Public Sector?
- When will they bring in the IR35 changes in the Private Sector?
- What are the UK’s Big Banks Doing about the IR35 Reforms?
- How Will the Big Banks’ IR35 Policy Affect the Contractor Talent Pool?
- What Further IR35 Reforms do the Conservatives Plan to Make?
- What Percentage of Contractors do the Conservatives Believe are IR35 Compliant?
- What Do the Labour Party Offer Contractors on IR35 etc.?
- What Benefits Would Labour Give Contractors Inside IR35?
- What Do the Liberal Democrats Offer Contractors on IR35 etc.?
- Who are the Best of the Main UK Parties as regards contractors IR35 vote choice?
- What Do the SNP Offer Contractors on IR35 etc.?
What Do the Conservative Party Offer Contractors on IR35 etc.
The Conservatives tricked freelancers and their representatives like IPSE into believing that they would abolish IR35 in the 2010 election that brought them to power. ISPE even rushed out a press release just prior to the 2010 election. However, despite verbal assurances what the Conservatives put in their Manifesto was that they would “look at” IR35 again.
They were s good as their word.
They did “look at” IR35 again. They decided to keep it.
Worse than that they decided to STRENGTHEN IR35. Even while laying off thousands of HMRC staff they recruited 30 IR35 Compliance Officers based in Edinburgh, Croydon and Salford. They have been strengthening IR35 ever since.
How did the Conservatives change IR35 in the Public Sector
They made sweeping changes to the way IR35 works in the public sector. They made it the responsibility of Government organizations to decide a contractor’s IR35 status.
They also made it that if the Government department got it wrong they would be heavily fined.
They also guaranteed that if a company’s contractors are tested outside IR35 using HMRC’s dodgy tool Check Employment Status for Tax (CEST), HMRC would stand by that result ever if later on it was shown that the contractor was inside IR35.
That was a huge incentive for Government organizations to blanket ban the use of contractors who operate personal service companies. The NHS, MoD and HMRC themselves did this. This has since been relaxed a little.
However, the NHS has been fined £4.3m for ‘misapplying IR35″.
When will they bring in the IR35 changes in the Private Sector
Despite the problems this caused in the public sector with computer systems being delayed by IT Contractors jumping ship rather than face a severe cut in their income and doctors leaving the NHS, the Conservative Government decide it would be a great idea to implement it in the private sector too in April 2020.
This will bring in £3 billion in 4 years. That’s the equivalent of less than a tenth of a penny on income tax.
Yet, if contractors in the private sector jump ship like those in the public sector, the UK economy could be decimated.
What are the UK’s Big Banks Doing about the IR35 Reforms
All the UK’s big banks, perhaps looking at the £4.3m fine on the NHS for misapplying Brexit, have all decided to put a blanket ban on hiring contractors who operate via a personal service company.
They have told their existing contractors that they must dump their personal service companies and pay PAYE either through an umbrella company or their agency – or leave.
If their contractors do leave then they will take away with them not only their skills and experience, but also knowledge of the bank’s business and computer systems.
How Will the Big Banks’ IR35 Policy Affect the Contractor Talent Pool
The big banks always paid a premium and so got a lot of the best of the contractor talent. In one fell swoop that differential will erode if the contractors have to pay PAYE. In fact it will be worse than that when you take into account the extra tax bank contractors will have to pay, rates in he banking sector will be among the lowest.
There’s an old but very true saying. If you pay peanuts you get monkeys.
What Further IR35 Reforms do the Conservatives Plan to Make
However, the Conservatives plan to go even further if re-elected.
They said, in the Queen’s Speech that “We will increase fairness and and flexibility in the labour market by stopping employers and workers experiencing significantly different outcomes from flexible forms of working.”
This echos Theresa May’s statement that “it is an unfair anomaly that a self employed person earning £100,000 a year pays less tax than an employee earning £100,000”.
What Percentage of Contractors do the Conservatives Believe are IR35 Compliant
Add in Treasury Minister Jess Norman saying recently when answering a question in Parliament on IR35 “There is only 10% compliance in this area”.
So, he reckons that after 20 years of IR35 that only one contractor in ten is in compliance. He, Boris Johnson and Sajid Javid must believe that ten times as many contractors should be paying IR35 PAYE as now pay it.
They obviously intend to do something about that. They would have done so in the November 6th Budget following the Queen’s Speech. They cancelled that because of the election.
However, they announced that they will hold a post election budget on December 19th. It is then that they will announce new measures to trap the 90% of contractors who are non-compliant with IR35.
Happy Christmas freelancers!
What Do the Labour Party Offer Contractors on IR35 etc.
It was Labour, under Tony Blair, who brought in the IR35 legislation in the first place Contractors haven’t forgotten that.
There is nothing in Labour’s latest Manifesto about IR35 or contractor issues So we will give you their last stated position on IR35.
Labour say that the default position is that all people who work for a company are deemed to be employees of that company. That’s unless the company can prove that the person is not an employee.
One would expect that this would force companies to blanket ban contractors using personal service companies. One would expect that there would be penalties for companies who don’t comply. So, why would they take the risk when it is contractors rather than companies who are punished by having to pay PAYE.
What Benefits Would Labour Give Contractors Inside IR35
One difference in Labour’s IR35 policy is that contractors inside IR35 would be entitled to many of the same benefits as permanent employees get like sick pay and holiday pay.
Labour also want to get rid of umbrella companies. So, presumably most contractors would either be employed by the company hiring them, or, more likely their recruitment agency.
So, it would be difficult to still call them contractors if they were being paid by their agencies and getting benefits from them.
What would be the difference between them and employees of the agency?
What Do the Liberal Democrats Offer Contractors on IR35 etc.
The Lib Dems are almost good on contractor issues.
They said in their Manifesto that they would abolish the Loan Charge – which contractors would like.
They also say, like Labour and unlike the Conservatives, that they would give contractors inside IR35 employee benefits.
So, will they go the whole hog and say they will scrap the IR35 reforms?
No, not quite!
They say that they will ‘review IR35’.
That sounds too much like “we will look at IR35 again” from the 2010 Tories.
I know it is not the same people, or the same party, but if they intended abolishing the reforms I’m sure they would have said that.
Who are the Best of the Main UK Parties as regards contractors IR35 Vote Choice
Nevertheless they are the best of the three main UK parties on IR35 and other contractor issues.
They want to implement the Matthew Taylor Report on Self Employment This divides contractors into Dependent Contractors and Independent Contractors.
It also recommends that Dependent Contractors get employee benefits.
Another recommendation that it makes is that a new definition for self employment is needed for the modern age.
What Do the SNP Offer Contractors on IR35 etc.
The SNP are probably the most contractor friendly of the main parties. Their current policy is that the IR35 reforms in the private sector should be delayed till contractor concerns are addressed, e,g, the dodgy HMRC IR35 test tool.
They said a few years ago ‘We are very sympathetic to its (IR35) repeal. We have particularly concerns about IT contractors losing the rights of staff members whilst still asking them to make the same contributions.’
For a fuller view on their policies click on SNP IR35 Policy – Government Must Address Contractor Concerns
We couldn’t find anything Nigel Farage ever said about IR35.
So, there you have it. This assessment is purely based on contractor issues Readers may s other issues as more important, like the NHS or Brexit.
Or they may see IR35 as the biggest factor to them as it affects what they earn.
PS there has been a sudden late game changer since I wrote the above article.
Astonishingly Labour now say they will scrap the IR35 reforms in the private sector due to be implemented in April 2020. I am working on the article now with full details.
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