The former Chancellor – who introduced IR35 reform – is handed the keys to Number 10
Rishi Sunak is the new leader of the Conservative Party and Prime Minister, after Penny Mordaunt and Boris Johnson withdrew from the race for Number 10.
Sunak’s appointment – less than two months after his predecessor Liz Truss was voted in as Prime Minister – comes a week after Chancellor, Jeremy Hunt, U-turned on the vast majority of the tax cuts announced in September’s mini-Budget.
It also coincides with the announcement of the Medium-Term Fiscal Plan, which will be revealed on 31st October and could include up to £20bn worth of tax rises.
New Chancellor weighing up tax hikes in Halloween Budget
According to reports, the Chancellor has been told by the Office for Budget Responsibility (OBR) that the government needs to raise £40bn to repair public finances.
Hunt may look to raise around half of this figure by reforming Capital Gains Tax, abandoning the government-funded removal of green levies for energy bills, cutting defence spending and increasing tax for the wealthy – a move that could raise £15bn for the Treasury.
However, as stated in the Telegraph, measures that would impact the lowest-income families are off the table.
The National Insurance reduction, which was one of the few parts of the mini-Budget to be left alone, is said to be under threat. Although, the Telegraph has also said this seems “politically highly unlikely”.
The hike was initially introduced by former Chancellor and now Prime Minister, Sunak, in April of this year.
And it is this – Sunak’s history of introducing tax reforms that negatively impact freelancers and contractors – which meant that his appointment was not widely welcomed by industry experts.
Sunak as PM is “bad news for the self-employed”
Julia Kermode, founder of IWORK – a body that champions independent workers – said that she “can’t help but think that Rishi Sunak’s appointment is bad news for the self-employed”.
“Just look at his track record”, she added. “He rolled out IR35 reform, along with various other tax increases, and knowingly excluded millions of self-employed people from Covid support”.
Ahead of the Halloween fiscal statement, Kermode also recommended that the government support lower-earning self-employed workers who “need support” and “need it now”.
A “quick win for the new Prime Minister” and one which “would make a big difference to anyone supplementing their income to pay their bills – is to raise the £1000 trading allowance. Increasing this would mean self-employed people could earn more before being taxed.”
New PM promises “integrity” as UK faces up to “profound” challenges
When throwing his hat into the ring for the role of Prime Minister, Sunak spoke of a “profound economic crisis” but promised “integrity, professionalism and accountability at every level of the government”.
However, contractors, in particular, do not seem convinced. Sunak came under fire on Twitter, having rolled out IR35 reform in the private sector and for the gaps in the Covid support schemes, which left millions of self-employed workers without financial help.
One commentator, Tweeted: “Thousands of contractors, self-employed, naturally Conservative voters, will forever remember that it was a Tory government that stopped them running their own Ltd Company business, realised their mistake and reversed it, then took it away again. #IR35”.
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