- Directory of Members
FCSA Chief Executive, Julia Kermode responds to Chancellor Rishi Sunak’s Budget 2020 announcement.
Given the growing seriousness of the coronavirus outbreak nationally, we had been forewarned that the government would be committed to announcing spending measures and tax cuts to protect individuals and businesses from financial hardship during these unprecedented times.
And, whilst those measures announced in Chancellor Rishi Sunak’s first budget are welcomed by FCSA, specifically, those that will support the self-employed and gig economy workers, I am shocked that he made absolutely no mention of IR35 or the off-payroll reforms in his budget speech, except perhaps veiled in his comment with regards to dealings with tax avoidance and compliance when introducing his public sector spending plans.
The omission is insulting, to say the least for our sector; not just to the many thousands of professional contractors who will be affected by the off-payroll reforms, but also to the House of Lords, trade bodies, and the many MPs that have raised their concerns about these reforms to the government.
As expected, the Budget 2020 Red Book confirms that the off-payroll legislation will come into effect this coming April in arrogant disregard for all the many sensibly argued submissions made to the government, like it or not.
Recently, HMRC published its review of off-payroll in readiness for implementation in April. Included within this review was a commitment to commissioning external research into the impact of the reforms after six months of implementation. Now that we have absolute confirmation that the reforms will come into effect, the FCSA is calling for HMRC to undertake this research independently, ensure all stakeholders can contribute, and should consider the conclusions from the recent House of Lords Finance Bill Sub-Committee inquiry, particularly as they were dismissive of the reforms.
On the positive side, we welcome the announcement that the government will fund Statutory Sick Pay (SSP) for small firms with less than 250 employees. But of course, this will not be applicable for most umbrella firms who will have more than 250 employees and, therefore will need to foot the bill themselves.
In the build-up to the Budget, it had been expected that Entrepreneurs’ Relief would be scrapped in its entirety. However, Mr. Sunak confirmed instead that will be scaled back from a £10m lifetime allowance to £1m. This is good news for any self-employed person who is looking to close their limited company in light of the forthcoming changes to off-payroll.
The FCSA also welcomes the employment allowance increase to £4,000. At this time, any measures introduced that will help to save money for businesses in our sector can only be considered a positive move. In contrast, however, is it disappointing that Corporation Tax has been frozen at 19% instead of the previously announced cut that was due later this year.
Tax avoidance schemes in our sector remain rife. We therefore strongly welcome proposals outlined in the Red Book that will enable HMRC to tackle them, and stop such schemes from aggressively targeting contractors whose income is reduced due to the forthcoming off-payroll reforms. Similarly, we also welcome proposals to consult with our sector on raising standards within the tax advisory market.