Liz Truss has been appointed Prime Minister, almost two months after an under pressure Boris Johnson resigned from the post.
Eventually competing with Rishi Sunak – the former Chancellor of the Exchequer in Boris Johnson’s government – in the Conservative Party leadership campaign, Truss campaigned on the promise of a low-tax, low-intervention government.
Winning 57.4% of the available vote, Truss was declared leader of the Conservative Party on Monday 5th September, and in a short speech promised to “deliver a bold plan to cut taxes and grow the economy”.
While the expected emergency Budget towards the end of this month should offer a clear indication of Truss’s tax policies and support of contractors and the self-employed, here is what we know so far…
In a mid-August, Truss promised to review IR35, saying that the reform is “all about trying to treat the self-employed the same as big business”.
She continued “if you’re self-employed, you don’t get the same benefits as being in a big company… the tax system should reflect that”.
However, in a recent LinkedIn survey conducted by Qdos Contractor, we found that very few people have confidence in Truss’s promise to review this recently reformed legislation.
In fact, the vast majority (94%) of nearly 500 individuals polled held the opinion that her pledge to review IR35 was an “empty promise”.
While Truss had been quiet on Income Tax throughout the leadership campaign, news reports have suggested that she is considering shifting the tax brackets around, which would see the basic rate threshold (20%) rise from £52,700 to £80,000.
Truss was opposed to the rise to National Insurance introduced in April 2022 by Rishi Sunak in his last Budget as Chancellor – and has criticised him throughout the leadership campaign for raising taxes.
So far, it sounds like Truss plans to reverse the increase, based on comments she herself made during an interview with the BBC’s Laura Kuennsberg on Sunday 4th September, reported here.
As in the case of National Insurance, during the leadership campaign Truss was at pains to point out two things.
Firstly, her competitor Rishi Sunak was responsible for introducing the planned rise to Corporation Tax, set to take effect in April next year; and secondly, that she had opposed that rise when it was announced.
Therefore, Corporation Tax could be one of the first taxes in Truss’s sights, in a bid to ease the tax burden on businesses and attract investment to the UK.
The Loan Charge was introduced as a mechanism to recover taxes owed to HMRC, which were often unknowingly avoided by contractors operating through disguised remuneration schemes.
Since its introduction, there have been nine suicides linked to the charge, and a parliamentary group has been established to lobby for change.
According to Contractor UK, Mrs Truss has pledged to look into both the loan charge and the suicides linked to it, calling it a “very, very tragic” situation. However, she gave no indication of how soon such an investigation might begin.
In addition to taxes impacting business owners, there’s also growing pressure on the government to provide help to those facing sharp increases in energy costs.
As yet, Truss hasn’t confirmed her plan for protecting businesses against rising energy prices, but has suggested tax cuts –- particularly on green levies – which may help to reduce bills.
Small businesses are in a difficult position, however. They are not protected by the domestic energy price cap, which offers consumers some degree of protection from rising wholesale electricity prices. This leaves businesses exposed, but may not be solved by cutting green levies alone.
As such, the new Prime Minister will be expected to deliver a comprehensive package of support.
The Chancellor (at the time of writing), Nadhim Zahawi, is considering cutting VAT and business rates, though any plans will likely become clearer in the coming weeks as Mrs Truss assembles her Cabinet.
Want to stay up to date with relevant industry news and insights? Our monthly newsletter includes a mixture of informative articles and video updates from trusted experts. Consider subscribing here.
Ask away! One of our team will get back to you!