The Association of Independent Professionals and the Self-Employed (IPSE) has raised some key questions about the implications for contractors and the self-employed of the Prime Minister’s surprise announcement of a snap General Election in June.
Commenting that no one outside Mrs May’s cabinet foresaw this decision, IPSE’s Director of Policy, Simon McVicker, asks what contractors can expect if Mrs May succeeds, as seems likely, in obtaining a stronger mandate from the electorate.
Mrs May has reluctantly conceded that her party’s existing Parliamentary majority may be too small to enable her to secure a sound Brexit deal. Her Government has already had to backtrack on plans to hike NICs for the self-employed, a concession that almost certainly would not have arisen if her party’s majority was larger.
Mr McVicker believes that the 8th June General Election is inevitable in the light of the May Government’s weak majority and the small window of opportunity facing it: Brexit negotiations will take a serious and vigorous turn after the German Federal Elections in September.
Should Mrs May secure a stronger mandate, a so-called “hard Brexit” will be firmly on the cards, and Mr McVicker anticipates that the plan to raise NICs on the self-employed will be also. The Conservatives pledged only to defer the rise during this Parliament, an obligation that of course would vanish after the election.
Mr McVicker writes: “Will the Chancellor use his autumn Budget to try and raise NICs on the self-employed again? The fiscal position will not have changed just because there is a General Election.”
On the issue of the Taylor Review, he predicts that it will be delayed but not cancelled. The review’s findings may have a stronger status with a freshly re-elected Government, which means that the definition of self-employment will remain firmly on the agenda. Yet, as Mr McVicker observes, it remains to be seen what rights, if any, that the new Government will extend to the self-employed.
The other key questions posed by Mr McVicker are: “What about IR35? With a new mandate, will the Government be emboldened to roll out the recent public sector changes in the private sector too? Will the Dividend Tax be adjusted?”
Prior to the introduction of new IR35 rules for personal service company contractors engaged by public sector bodies (PSBs), Dave Chaplin, founder and CEO of ContractorCalculator, advised the latter to transfer their contractors to PAYE Umbrella Companies. This would allow sufficient time to accurately determine each contractor’s IR35 status.
The many who will be caught by the new rules would then have the option of remaining as Umbrella Company Employees and retaining their flexibility rather than being forced back into salaried employment.