The Chancellor of the Exchequer has been slammed by industry experts for failing to mention contractors or any of the UK’s 5m self-employed workers in the Summer Statement, which was criticised for overlooking the needs of the independent workforce.
In what was described as a ‘mini-Budget’, Rishi Sunak outlined £30bn worth of Government spend to kickstart the flailing economy. However, freelancers, contractors and self-employed workers were once again “overlooked when it matters”, CEO of Qdos, Seb Maley explained.
Instead, the Chancellor’s speech focused on jobs, with the Government desperate to prevent a dramatic increase in unemployment when the furlough scheme ends. A job creation plan, Stamp Duty holiday and significant VAT cut for hospitality and leisure were also notable announcements.
Having confirmed the Coronavirus Job Retention Scheme (CJRS) will end in October, the Chancellor revealed a Job Retention Bonus, which he hopes will stop unemployment climbing further. As part of this bonus, employers will receive a £1000 grant per employee (paid over £520 per month) they keep on until the end of January 2021. Further details are expected at the end of July.
But whilst IPSE said the Job Retention Bonus was one of “many positive measures to boost the economy”, Director of Policy Andy Chamberlain also pointed out that millions of self-employed workers claiming via the Self-employment Income Support Scheme (SEISS) “are left to face a cliff-edge in August. Some freelancers relying on the Self-Employment Income Support Scheme (SEISS) may benefit from the sectoral support announced today, but many more will not.”
Chamberlain then called on the Chancellor to “introduce a tapered end to SEISS to address the clear imbalance between employees and the self-employed.”
Several job creation measures were also announced as part of a £2bn ‘Kickstart Scheme’ that will cover the costs of six month work placements for 16 to 24 year olds currently claiming Universal Credit. The Government will also pay businesses £1000 per trainee under 24, while employers in England will receive £2000 for every apprentice under 25 brought on and £1,500 for an apprentice over 25 hired. This starts in August for six months.
The other standout development in the Summer Statement was the cut to Stamp Duty, which will not apply to property bought for up to £500,000 until 31st March 2021. Zoopla has estimated this will apply to as many as 89% of property purchases and is something that Simon Butler, Director of contractor mortgage firm, CMME, said “will allow many buyers to boost their deposit fund. This can only be seen as a positive move for the housing sector and the mortgage market.”
A significant VAT cut was extended to specific areas of the hospitality and leisure sectors, both of which have been at a standstill since lockdown restrictions were enforced in March. VAT for certain businesses operating in these sectors will drop dramatically, from 20% down to 5% for six months.
As welcome as many of these measures are, according to IPSE, there’s no hiding from the fact that Stamp Duty aside, there’s very little for contractors – who are preparing for the certain rollout of IR35 reform in 2021 – to take from the Summer Statement. Andy Chamberlain touched on this, urging the Chancellor to “adopt policies that will back” independent professionals, “like limited companies and the newly self-employed, who missed out on support during lockdown.”