Contractors and Brexit

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The post-referendum fallout has sent shockwaves through the worlds of politics and finance with Britain’s future seeming distinctly unclear.

There are a number of questions which the Brexit decision will pose for contractors.  These can be divided into three distinct areas.

  • How UK contractors will be affected working at home
  • How they’ll be affected working in Europe
  • How contractors will be affected trading out of UK but into Europe

 

Immigration

It is unclear at present what new model immigration policy will take on.  Leaving the single market will mean Britain regains full control over its borders, allowing for restrictions in EU immigration, replaced with an Australian style points based system.  This could in fact increase competition in the contractor market as the UK seeks to attract more highly skilled workers.

Indeed, it has bee suggested by pro-leave campaigner Daniel Hannan that Britain may not experience reduced immigration at all.  However many politicians such as Boris Johnson have stressed that access to the single market should be prioritised over reduced immigration.

Also in a future out with the EU the UK will no longer be bound by its obligation to enact EU laws.  This include some many contractors find burdensome such as the AWR (Agency Workers regulations).  However much like Norway the UK may still have to enact many EU laws to allow access to the single market.

 

UK’s Compliance Landscape

Another question that will be at the forefront of contractors’ minds is what happens to the proposed changes to IR35 spearheaded by the chancellor.  Will these continue if he follows David Cameron out of office come September? Not knowing what the new chancellor’s position on IR35 may be it’s hard to say but many argue that at this time of economic uncertainty it would be an unwise move to restrict the flexible labour market.

Another issue to consider that may see changes as a result of the Brexit decision is ‘Making Tax Digital’.  Proposed by HMRC, yet opposed by many contractors, MTD may actually be delayed if the chancellor leaves (even if the civil servants working on the program for all micro-businesses and self-employed to have to submit quarterly tax returns remain).

 

Trade and the Economy

A number of scenarios have been put forward for professionals who are running their own small consultancies located in the UK but who trade in Europe.  Things however mostly boil down to whether the UK will remain part of the single market, at least to some extent.  Mr Cameron has said emphasised that he envisages remaining at least “in some form”, knowing as he does that access to the market would involve paying into the EU budget and abiding by EU laws.

It cannot be argued that the markets have reacted profoundly negatively to the Brexit result however their remains hope that this short-term turbulence may in time be replaced by a new dynamism, for the time being however we will just have to wait and see.

 

Freedom to Work in the EU

What about the post-Brexit position of the UK contractors who want to work in Europe?  It is too early to say exactly what the situation will be until a new deal with Brussels is thrashed out.  It is however likely there will be new hurdles for contractors, whilst there will be no immediate effect on free movement it is possible UK contractors will need a visa to work in the EU in the future.

 

The Future

Overall it would seem that whilst the future is unclear the picture is not all doom and gloom.  What with new leadership guaranteed and the possibility of a general election on the horizon we may see changes to IR35 and the Making Tax Digital scheme abandoned in favour of keeping the UK a dynamic and formidable location for contractors in the post-Brexit reality,

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