The Liberal Democrats have revealed in their Manifesto that they plan to review IR35 reform and end the devastating Loan Charge, should they come into power in December.
As part of leader Jo Swinson’s ‘Plan for Britain’s Future’, the Party announced it would “end retrospective tax changes like the Loan Charge brought in by the Conservatives so that individuals and firms are treated fairly.” The Manifesto also included a promise to “review recent proposals to change the IR35 rules” and said it would “take tough action against corporate tax evasion and avoidance” made by international tech giants and large monopolies.
This pro-contractor Manifesto has been music to the ears of many independent workers and IR35 experts, who have regularly outlined the unfairness of recent and incoming changes to the IR35 legislation. On 6th April 2020, IR35 reform will be enforced in the private sector. It will see contractors lose the right to set their own tax status, with the medium and large firms they work with taking on this responsibility. A similar version of the rules has been in place in the public sector since 2017.
Meanwhile, the Loan Charge – an issue which the Prime Minister recently ordered a “thorough review” of – has left tens of thousands of contractors with monumental tax bills and led to several confirmed suicides.
This long-overdue support of contractors from one of the major political parties has been applauded by industry commentators, with Qdos Contractor CEO, Seb Maley describing it as a “bold but very welcome statement of intent,” before praising the Liberal Democrats “that clearly recognise the importance of the independent workforce.”
Mr Maley was, however, quick to add that “actions speak louder than words.” He also made the important point that “it remains to be seen whether they (the Liberal Democrats) will form a part of the next Government.”
With the introduction of IR35 reform now just months away, Contractor Calculator CEO, Dave Chaplin also welcomed the Liberal Democrats’ acknowledgement of the issues impacting contractors most. He said “a considered review of IR35 and these devastating proposals is just what is needed,” then criticised the sheer complexity of the employment status test which hasn’t “worked for 20 years under the intermediaries legislation and hasn’t worked under the new rules either.”
In addition to being well-received by contractors, the Liberal Democrat Manifesto also shined an unfavourable light on the existing Government’s treatment of the independent workforce in recent years.
FCSA’s Julia Kermode was one of several experts who condemned the Conservative Party for introducing initial IR35 reform two years ago before committing to roll-out changes in the private sector next year: “In the last few years we have seen many changes to tax legislation and IR35 reform is one change that has not been properly targeted, not been proportional and not been fair for the vast majority of genuinely self-employed workers or the businesses that have engaged them. However, this current Government is yet to acknowledge that.”
Incidentally, both the IR35 legislation and the Loan Charge were ignored in the Labour Party’s and the Conservative Party’s respective Manifestos – a development which could mean the vote of the UK’s contractor workforce is up for grabs, explained Qdos CEO, Maley.
“That the Liberal Democrats have shown they at least understand the issues most important to contractors will likely win them the support of independent workers who feel let down by the existing Government.”
You can read the entire Liberal Democrat Manifesto here.