Spring Statement 2018

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The experts were labelling yesterday’s Spring Statement a washout before The Chancellor had even stood up to address his Parliamentary peers and the nation. And in many respects they weren’t wrong. But perhaps in a slimmed down version of the Budget – as it has been described – this was to be expected. 

After announcing that changes to fiscal policy will occur only once a year in the Autumn Budget each November, Philip Hammond had already made it clear that he wouldn’t spring any surprises.

With this in mind, The Chancellor laid out plans for consultations and reviews instead. Despite making a number of new promises impacting contractors and the self-employed, the Spring Statement was no showstopper. And as expected, in The Chancellor’s speech, there was no mention of the elephant in the room; IR35.

 

IR35 consultation.

In fairness, the Government’s written statement released soon after Mr Hammond had spoken, did allude to off-payroll working. It promised publication of the IR35 consultation in ‘the coming months’, stating:

‘A consultation on how to tackle non-compliance in the private sector, drawing on the experience of the public sector reform. The Government will work with businesses and individuals to mitigate the potential administrative burdens of any future changes.’

Still, this doesn’t shed any light on the uncertainty surrounding further IR35 changes. The Spring Statement marked yet another opportunity for The Chancellor to offer clarity, which he duly ignored. Predictably, and yet again, the sector has been left in the dark, left to wait and wonder.

Regardless of its findings, the sooner the details from the long-awaited IR35 consultation are published, the better.  Private sector IR35 changes are unnecessary, but if the Government actually intends to extend reform, each party in the supply chain will need time to digest the information and prepare for its introduction.

For the sake of everyone involved, implementation would need to be much smoother this time round.

 

Late payment consultation.

Aside from another frustrating stock statement regarding IR35, The Chancellor also pledged to hold a consultation into late payment. Of course, any moves made to stop the scourge of late paying clients will be welcomed by independent workers. But actions speak louder than words, and contractors will wait for the introduction of policy before getting ahead of themselves.

 

Big business tax activity.

The same goes for new promises made to scrutinise the tax activity of big businesses too. Philip Hammond vowed to make ‘sure multinational digital businesses pay a fair share of tax.’

This will be music to the ears of contractors, 95% of whom already believe large corporations should have their tax activity examined further. That said, it’s not the first time the Government has pledged to tackle this. So again, it’s a case of wait and see.

Training tax breaks.

The Chancellor also outlined plans to consult on how the tax system supports self-funded training for employees and the self-employed. Currently, independent workers are not granted tax relief for training in the way that employees are.

Without doubt, this will be well-received by freelancers and contractors. But it doesn’t detract from the bigger issue surrounding IR35 and the way in which independent workers pay tax on their earnings.

In summary, The Chancellor’s Spring Statement message was a clear and very familiar one. The Conservatives are, as he put it, ‘the party of small business and the champions of the entrepreneur.’

But for this to truly be the case, the Government must rethink its attitude to the off-payroll working rules. Recent and potential changes to IR35 legislation has led 97% of contractors to state they do not believe Theresa May and her Cabinet has their best interests at heart.

The Chancellor would be wise to take this into account as he presses on with the IR35 consultation. Making private sector engagers responsible and in-turn liable for IR35 assessments would be disruptive, particularly in the short-term, as clients and agencies get to grips with this new, unwanted and extra responsibility.

That said, in time, and by starting preparations now , private sector reform could be managed. Whether the Government would be able to salvage anything from its already fractured relationship with the UK’s 2million contractors however, is another thing altogether.

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