The results are in. Boris Johnson secured a landslide majority in the general election, with many Labour seats falling to the Conservative party.
But what does this win mean for those self-employed across the nation? While it’s impossible to know with one hundred per cent certainty the impact this will have on the sector, as well as on contractors and freelancers, there is now more clarity and certainty on what the next government intends to do.
What a Conservative Majority Means
Because there was previously no majority in government, making decisions and passing regulation was a more complicated affair; this majority makes it easier to make decisions, which can be a positive thing for the self-employed. After all, this clarity allows people to move on and to get on with their lives and their businesses without worrying about uncertainty.
However, it’s still important to keep in mind that, with the new government, it’s likely we’ll have a more onerous regulatory environment for the self-employed.
As contractor accountants, we’re used to regulation changes, so we know things will change once the new government is formed and, of course, once the Prime Minister delivers on his promise to see the UK exit the EU on 31 January 2020.
It’s crucial to keep on top of everything that is changing in the self-employed sector, so we’re now taking a look at the promises made by the Conservative party while campaigning; more specifically, its manifesto.
Should everything written in this manifesto come to fruition, what will it mean for contractors and freelancers?
The Conservative Manifesto
Boris Johnson has made several claims and promises during his election campaign, some of which may affect the self-employed:
Taxes
For instance, he has promised not to raise the rate of income tax, VAT or National Insurance contributions. In addition to this, the party aims to raise the National Insurance threshold from £8,632 to £9,500 in 2020.
They’ve also promised to implement a digital services tax, meaning large search engines, social media platforms and online marketplaces derived from UK users will pay a 2% levy on their revenues.
The Conservative manifesto speaks about supporting the self-employed when it comes to improving access to finance and credit and to making the tax system easier to navigate as well.
More Work in Different Sectors?
Contractors working in the renewable energy sector – or any other field where sustainability is a concern – may benefit from the Conservative’s promise of not only reaching Net Zero by 2050, but also of investing in clean energy solutions and green infrastructure to reduce carbon emissions and pollution.
Part of the manifesto also includes millions of pounds invested weekly in science, schools, apprenticeships and infrastructure (while controlling debt). Should this happen, it could mean more jobs for contractors and freelancers across the country. Also, the Prime Minister has promised to invest more in the NHS, with the end goal of having 5,000 more doctors, 50,000 more nurses and 50 million more GR surgery appointments a year.
Because we provide accounting for contractors, we work with many different contractors and freelancers, from supply teachers and IT contractors to locum vets and property owners; this means we understand just how important it is for self-employed individuals to have more transparency on potential contracts and gigs moving forward.
Help for Start-Ups
Another promise made by the Conservative party is to make the UK the ‘best place to start and grow a business’. To achieve this, they intend to increase the Employment Allowance for small businesses, which will mean a tax cut for thousands of small firms. They also aim to expand start-up loans.
However, Johnson has also said the Conservatives plan to review the entrepreneur’s relief, something that reduces capital gains tax when individuals sell all or part of their business. This is important for many business owners considering retirement, so it may prove to be an unpopular decision.
Brexit
The issue of Brexit has also been divisive and has created an environment of uncertainty, so a Conservative majority has provided more clarity in that regard. It will allow people to move on with their lives and to get on with business instead of being unsure whether Brexit is a done deal or not.
However, while Johnson campaigned with the slogan ‘Get Brexit Done’ and the UK’s exit from the EU is, evidently, one of the Conservatives’ key points, many people doubt whether it’s possible to reach a finalised deal by 31 December 2020, as the party promised.
IR35
And what about IR35?
During their campaign, the Conservatives pledged to take another look at IR35 and, with many contractors rightfully demanding a review of this ‘intermediaries legislation’, it’s clear that the new government will have to now consider its impact on people’s livelihoods, especially as the rollout to the private sector will occur on 6 April 2020.
After all, while this complicated tax legislation is meant to combat tax avoidance, many are not happy about the way HMRC handles cases of contractors who may be caught within IR35. And, with HMRC losing several IR35 cases in the First-Tier Tribunal, it’s even more obvious that something needs to change.
Summary
So, what does Gorilla Accounting take from this majority result?
According to Richard Manley, Director at Gorilla Accounting: “The results of the general election provide much-needed clarity for the self-employed sector. Contractors and freelancers up and down the country can now get on with their business with a far clearer idea of how the regulatory environment for the self-employed will develop.
However, there are still unanswered questions for the new government on this issue, and we hope that its promised review of IR35 will be a key priority.”
At Gorilla Accounting, we provide specialist advice to all our clients which, considering the ever-changing nature of legislation – especially as the political climate prepares to shift once more – can help contractors and freelancers to stay on top of their finances. It also means our clients can have peace of mind that they’re compliant with the latest government regulations.
Please don’t hesitate to contact us to learn more about how we can help. Our professional accountants are more than happy to answer your queries.
