The Autumn Statement was an anti-climax, says Danbro managing director Damian Broughton, however, he warns it did raise some issues that those in the self-employment sector need to be aware of. Here he shares his thoughts on the Chancellor’s latest plans.

Chancellor George Osborne bellowed that this was a “budget for business”, but the reality was it was disappointing at best and a bit of a non-event at worse.

We, like the army of self-employed people around the UK, watched his lengthy performance with baited breath but were left none the wiser. We knew he had plans to restrict travel and subsistence claims and clear confusion around the use of intermediaries, but neither of these critical issues were addressed in the speech.

Even when we got our hands on the detailed plans published immediately after his statement, we still knew very little about what to expect.

Put simply, the Autumn Statement did little to clear confusion around the use of intermediaries and, while he will push ahead with a crackdown on travel and subsistence regulations, we know nothing about how it will be implemented.

Thousands of opportunities for contractors

First the good news. The budget did have some positive elements for those in the self-employment sector.

The chancellor unveiled billions of pounds of new developments in his spending review and said: “we are the builders.” It’s fantastic news for contractors as it will generate thousands of new opportunities.

However, with his proposed crackdown on expenses claims, my fear is that Mr Osborne may not have the skilled people he needs to make these ambitious dreams a reality.

Other positive moves included a cut in corporation tax, clarity on dividend tax, a delay in auto-enrolment and cuts to business rate relief and also huge investment in bringing the HMRC into the digital age. 

Tax grab on travel and subsistence claims

Travel

The real hammer blow unveiled in this spending review was the chancellor’s decision to push ahead with restrictions on tax relief for travel and subsistence claims. Danbro, and a wealth of similar organisations, have lobbied hard to get these plans postponed and reviewed but our pleas have fallen on deaf ears.

A short paragraph in the 156-page document says “workers engaged through an employment intermediary, such as an umbrella company or a personal service company” will be affected by the move from April next year.

We know little else but should get more details on how this will be implemented very soon. The good news is that self-employed people don’t have to do anything yet and Danbro will be providing updates.

Our research shows the move could snatch as much as £200 a week from your pockets and, market forces allowing, businesses will have to make up that shortfall if they want to retain the freelance skills they need. My concern is that it could have a devastating impact on the sector and put a brake on the economy.

What will happen if I work with an intermediary?

The controversial IR35 reforms were not even mentioned in the Autumn Statement document so nobody is any clearer on how this will impact contractors in the future. The Government says it is still analysing responses to the recent consultation but we were offered one clue.

In the detailed Autumn Statement document one line says: “Following consultation, relief will be restricted for individuals working through personal service companies where the intermediaries legislation applies.”

At this moment we can draw two conclusions. One is that HMRC may intend to boil down IR35 to one simple supervision, direction or control (SDC) test. They do not have the resources to police this sector and that could be an easy option for them. We’ve been promised a full consultation on any changes, and we wouldn’t be surprised if there is a rushed consultation process leading to new legislation in April 2016.

The other option is that the Government has listened to industry concerns and decided one simple SDC test is unfair. If that’s the case, they will have to consider a range of employment status tests and the future of IR35 remains undecided. This may explain the delay on an expected decision.

Flexible workers are the bedrock of business

As I said at the outset, the chancellor claimed this was a budget for business, but in reality he has put our economic recovery at risk. This economy has grown for a number of years thanks to the strength of the UK’s flexible workforce. He’s now thanking those flexible workers by raiding their pockets.

My concern is that few self-employed people will want to travel in the future and that will have a massive impact on British industry who are desperate for the skills contractors offer.

Will you carry on working as a contractors, freelancers or sole trader if you can’t claim tax relief for travel and subsistence claims?

2 thoughts on “What does the Autumn Statement mean for freelance workers?

  1. We knew he had plans to restrict travel and subsistence claims and clear confusion around the use of intermediaries, but neither of these critical issues were addressed in the speech. Where such information?

    1. Many thanks for your comment and you are right to say these weren’t mentioned in the speech – something that concerned everyone in the industry. However, these proposals were included in the details published after the announcement and have been further clarified in the draft Finance Bill 2016.
      There are a number of updates in the following Danbro blogs, and these will provide more detail, but the reality is we are still waiting for more information.
      The travel and subsistence restrictions will go ahead this April and we will be providing full guidance as soon as we have all of the details.
      The Intermediaries Legislation – or IR35 – will remain unchanged as plans to update the rules have been put on hold for at least a year while further consultations take place.
      I hope that helps.

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