Chancellor slammed for ignoring freelancers and contractors in his first full Budget
Today (15th March), the Chancellor of the Exchequer, Jeremy Hunt, delivered the Spring Statement, setting out the government’s spending plans.
While this Budget announced several promising policies that will offer continued support to households, experts have criticised the Chancellor for failing to deliver significant measures to support self-employed workers.
Speaking to the BBC the weekend before the Budget, Hunt admitted that “there is a hard road to follow”.
However, he promised that the government would take a “responsible” approach and, when possible, “reduce the tax burden” – hinting that the Autumn Statement later this year will present opportunities to do so.
“Competitive tax regime”
The Chancellor stated in his speech that the government understands “the importance of a competitive tax regime” yet confirmed that the planned increase to Corporation Tax would go ahead this April.
This was despite fears from the former Home Secretary, Priti Patel, who questioned the government’s “current political obsession of regulation, high taxes and interference with business” in the Telegraph last month.
In the build-up to the Spring Statement, the government also faced calls from one of its own MPs to repeal the off-payroll working rules. Despite suggesting in his speech that “no-one should be pushed out of the workforce for tax reasons”, the Chancellor failed to address IR35.
Here’s a round-up of the Budget’s key takeaways, for freelancers, contractors and the self-employed:
- The Lifetime Allowance will be removed and the Annual Allowance will increase to £60,000, providing greater incentives for people to remain in work.
- The government has committed to harsher measures against tax fraud, including consulting “on the introduction of a new criminal offence for promoters of tax avoidance”. This consultation will coincide with further funding for HMRC to tackle tax debt.
- The increase to Corporation Tax will go ahead as planned, increasing the headline rate from 19% to 25%. However, given the 25% rate will only apply to businesses recording profits above £250,000, the Chancellor said “only 10% of companies will pay the full 25%”.
- While the ‘super-deduction’ scheme has ended, it will be replaced with a new policy of ‘full capital expensing’. The Chancellor said that “every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits. It is a corporation tax cut worth an average of £9 billion a year.”
Hunt also announced measures to help households through the cost of living crisis, which continues to squeeze finances:
- The Energy Price Guarantee has been extended until June
- Fuel Duty freeze extended for a further 12 months
- 30 hours of free childcare for children aged between 9 months and three years old
Posting his thoughts on Twitter during the announcement, Andy Chamberlain – Policy Director at IPSE – pointed out that the Lifetime Allowance move was “no bad thing but IR35 [is] still a massive deterrent to over 50s”.
Echoing Chamberlain’s comments, Julia Kermode, founder of IWORK, said she was “alarmed” by the lack of focused support for those struggling to make ends meet.
She added: “The Chancellor’s vow to tackle tax avoidance will strike a chord with the thousands of self-employed people who have been duped into working through avoidance schemes. But for many, it’s too little too late.
“The government should also take stronger action against those who recommend tax avoidance to innocent victims and receive enormous backhanders for doing so.”