What might Boris Johnson mean for freelancers, contractors and the self-employed?
Boris Johnson is a divisive figure. However, judging by his landslide victory against Jeremy Hunt in the Conservative leadership race, in which Mr Johnson doubled his opponent’s votes, the new Prime Minister starts his new job from a position of strength and with the backing of the majority of Conservative Party members.
We all know about the new Prime Minister’s personality and promise to deliver Brexit on 29th October ‘do or die’, but less is known about his view of small business, and in particular, the self-employed. Certainly at this stage, having only just assembled his Cabinet, we remain somewhat in the dark about Mr Johnson’s specific plans for issues of importance to freelancers and contractors.
That being said, there are a number of predicted changes the Prime Minister could introduce in time which will impact independent professionals. Along with focusing on the likelihood of Mr Johnson scrapping IR35 reform, we explored what his appointment could mean for the UK’s self-employed workforce.
Tax-cuts for higher-earners?
Quite possibly. As part of his promise were he to become Prime Minister, Mr Johnson pledged to increase the 40% income tax threshold considerably, from £50,000 to £80,000. Should this materialise, it would mean taxpayers would remain on the 20% basic income tax threshold until they hit £80,000 - an estimated saving of around £2,500 for individuals currently paying 40% tax on earnings over £50,000.
Corporation tax to be reduced further?
In the past, the Prime Minister has been quoted stating: “Every time corporation tax has been cut in this country it has produced more revenue.” And while The BBC argues this isn’t strictly accurate, the majority of limited company contractors would no doubt welcome a further reduction in the corporation tax rate. As it stands, the tax is due to fall from 19% to 17% next April.
IR35 position to be clarified?
Perhaps. Although with the draft legislation now published, it seems very unlikely that Mr Johnson would scrap IR35 changes that come into force next April - regardless of the fact it would be the wise thing to do.
Campaigning for a delay or U-turn will no doubt continue right up until the arrival of IR35 reform, so don’t be surprised if Mr Johnson, the new Chancellor, Sajid Javid, or his Cabinet members address the issue in Parliament. However, the chances of the new Prime Minister bowing to this pressure remains low.
Therefore, limited company contractors mustn’t rest their hopes on this happening and should work off the basis that these changes will go ahead. For information on how to prepare for IR35 reform, please head here.
A ‘proper’ review of the loan charge?
Last month, when discussing contractors impacted by disguised remuneration schemes, Mr Johnson hinted at the possibility of conducting a ‘proper independent review.’ Contractor UK published that Mr Johnson told LBC that “it seems superficially unjust, to me, that they (contractors) should be retrospectively pursued for what they were told was an entirely legal option.”
Only time will tell if the Prime Minister decides to go ahead with this, but the fact that the loan charge is on Mr Johnson’s radar should be considered positive news.
Alignment of tax status and employment status?
In time, possibly. The Government intends to hold a consultation to explore the possibility of aligning tax status with employment rights, which could mean that contractors operating inside IR35 are handed employment benefits in return for paying significantly more in tax. It would be a logical and fair step, given when working under the IR35 rules, contractors are deemed ‘employees for tax purposes.’
However, the amount of progress that will be made on this in the near future is uncertain. The Government has said its primary focus remains on successfully implementing next year’s reform to IR35 and there’s nothing to suggest that Mr Johnson will change course.
A genuinely pro-business Government?
Only time will tell. Boris Johnson holds traditional Conservative values, which suggests the new Prime Minister might introduce pro-business policies and be considerate towards the millions of people working for themselves in the UK, despite his infamous “f*** business” remark. Backtracking in the days leading up to being appointed Prime Minister, Mr Johnson apparently said he would be the “most pro-business Prime Minister” in history.
Along with ex-banker, Sajid Javid, who has been promoted to Chancellor of the Exchequer, the duo of Johnson and Javid could be beneficial for individuals running their own business. We shouldn’t forget either that the Conservative Party prides itself on being the party for small business, even though many of the actions of Theresa May’s Government might suggest otherwise.
At this stage, it is perhaps too early in the day to make predictions with any real certainty with regards to how the new Prime Minister and his Government will treat independent workers. What is clear, however, is that for Mr Johnson to strengthen the economy while delivering Brexit, it is in the Prime Minister’s interests to support independent professionals with friendlier tax policy.
While championing freelancing, contracting and self-employment, Qdos will continue to contribute to Government consultations and represent independent professionals’ best interests in the media.
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