The Autumn Budget – The final chapter in a big year for contractors

21st November 2017

Article written by:

Chris from iContract

As we’ve discussed in previous blog posts, it’s been quite a year for the self-employed workforce. With Brexit still courting mixed opinions across the contractor community, the publication of the Taylor Report, IR35 reforms to public sector contractors, and the government’s u-turn back in spring over a National Insurance hike for freelancers – contractors have certainly dominated the headlines in 2017.

As this year winds down to a close, contractors across the UK are awaiting the announcement of tomorrow’s autumn budget with baited breath. A cloud of inevitability is surrounding the freelance nation’s expectations of the Chancellor’s plans, with the strong belief that Wednesday’s budget will hinder the self-employed work-force rather than help it flourish.

The autumn budget then seems to be quite a fitting finale for contractors in a year that has not been short of incident, and with a Chancellor presenting a plan tomorrow that could make or break his job, it all makes for a dramatic final chapter of 2017.

With Chancellor Philip Hammond’s job apparently on the line with the autumn budget, there has been report that this budget will be full of ‘bold’ and ‘radical’ ideas. The mention of ‘radical’ could be interpreted in different ways, and many in the contractor community have only seen it as one way and that is negatively.

There seems to be a strong acceptance within the freelance world, that IR35 reform is on the cards again and will spill into the private sector. This could ultimately deter companies from hiring contractors in such large numbers because of unneeded and unwanted bureaucratic commitments and fear of potentially under-taxing contractors and the possible consequences of this. For the contractors, this would obviously mean less take home pay. We saw the NHS take a blanket approach to IR35 in wake of the public sector reforms and as a result we saw public sector contractors take a swift exit to enter the private market. If reforms were to hit the private sector, where would this leave currently engaged private contractors?

We mentioned about the government’s u-turn over N.I pay for the self-employed earlier this year. Contractors are expecting this to feature again in the Chancellor’s autumn budget plans but with strategic hindsight on the Government’s behalf of course. With there still relative uncertainty over Brexit, and a potentially costly divorce bill for the UK, could the Chancellor use this to support his plans and soften the blow, in an effort to increase much-needed funds for the Government.

Looking beyond these possible changes, is there room to contest them? Possibly. Many organisations supporting the self-employed community have of course made numerous cases to the Government stressing this form of employment’s economic importance, as well as argued the counter-productivity of IR35 reforms. With the N.I backtrack last spring, anything is possible really. Might we see then the Government use IR35 as a bargaining chip to let their re-emerged N.I plans go through?

Though there are signs that this autumn budget might not be contractor friendly, there is room of course to see some potential positives.

In general business terms, the prospect of the Government cutting Corporation Tax further is an indication they want to see UK businesses prosper and show they are open for business which will of course hopefully encourage growth and employer confidence.

There could also be positive benefits but might only be experienced long-term at this point. The budget’s investment plans look encouraging for the future UK workforce, which again is uncertain with the prospect of Brexit. With a huge financial boost to digital and construction skills, investment in more fully-qualified computer science teachers, and a focus on skills retraining schemes for adults, the Chancellor has clearly recognised Britain must be fit to compete in the growing Digital Economy and encourage the flourishing tech scene – an industry of which contractors play a pivotal role in.

What are you expecting from tomorrow’s budget? Sign into your iContract account and comment below.