Government must rethink tax & IR35 position

63% of contractors have urged the Government to prioritise building a fairer tax system

Traditionally, The Conservative Party has arguably been the UK’s most pro-business political group, and the Party most supportive of those brave enough to strike out alone and work independently.

Recently though, things have changed for the worse. From reform to public sector IR35, to the 60% slashing of tax-free dividend allowance, and – who could forget – new travel and subsistence restrictions, the Government has made itself particularly unpopular with freelancers and contractors.

It’s also difficult to ignore Philip Hammond’s recent and dramatic U-turn over the proposed increase to National Insurance Contribution. While reversing the plans to raise NICs was widely welcomed, it can’t have done much to convince the independent workforce that this is a Government united in its thinking towards the UK’s 2million freelancers and contractors.

Put simply, the Government has targeted freelancers and contractors. And the ongoing campaign to clampdown on tax avoidance has seen a number of measures introduced which surely must have tested the resolve of even the most loyal self-employed Tory supporter.

Following June’s General Election and the eventual formation of a majority Government, The Conservatives, with the DUP Party in tow, might still just about have the opportunity to start afresh and begin rebuilding its fractured relationship with the UK’s independent workforce. If freelancers and contractors are willing to give the Government a second chance, then Theresa May and her cabinet must engage self-employed voters.

It’s obvious where the Government should start - IR35 and the tax system. 63% of freelancers and contractors surveyed by Qdos Contractor have urged the Government to first prioritise building a fairer tax system, and one that works for contractors, not against them.

Such is contractor concern with regards to the current IR35 legislation and the Government’s general attitude on tax for the self-employed, that other pressing issues which make up the remainder of this contractor wish list are considered relatively unimportant in comparison, and by some way:

• 15.5% would like to see the appointment of a Minister for freelancers and contractors
• 10% believe Government should focus on making mortgages more accessible for the self-employed
• 7% called for Government to incentivise pensions for the self-employed
• 4.5% would like to see ‘other’ plans carried out first, including ‘cutting red tape’, and the ‘digitalisation of Government, to make company reporting simpler’

Clearly, freelancers and contractors would prefer to see this version of a Conservative Government focus on the issues surrounding IR35 and the tax system over anything else. And you simply cannot blame them.

A recently reshuffled Conservative Party, no doubt wounded by the recent General Election, should be keen to make amends. Is the Party prepared to be brave enough to reconsider its stance on IR35 and carefully assess how the current tax system impacts those working for themselves? Only time will tell.

If they are to take this seriously, they could win back the support of freelancers and contractors. But to do so, they must first engage with and listen carefully to the changing needs of UK’s growing community of independent workers.