Living up to promises of a policy-light Spring Statement, Chancellor of the Exchequer Phillip Hammond made no mention of much-mooted changes to the way IR35 works in the private sector, although his written statement did repeat the promise from November’s Budget to publish a consultation “in the coming months”.
The change to having an Autumn Budget and a Spring Statement was trailed by Mr Hammond as a return to a single fiscal event each year, with the statement being merely a report of the country’s economic position, required twice a year by the Industry Act 1975, rather than the mini-budget that Autumn Statements had become.
The Chancellor delivered what he had promised, reporting figures showing higher and lower public borrowing and deficits, although the independent Office for Budgetary Responsibility describes the improvements as modest and points out that they come from a low base in 2016. The usual boasts of public spending on infrastructure and services were followed by the announcement of some new tax consultations, mainly focused on proposals for environmental taxes and changing the way global tech giants are taxed. One promised consultation will come as welcome news for self-employed contractors, a proposal to allow tax deductions for work related training.
Organisations representing and working with contractors have been largely positive in their responses to the statement, especially on the lack of change for IR35. Samantha Hurley of the Association of Professional Staffing Companies (APSCo) welcomes a statement that she said “conveyed a clear realisation that the strength of the UK economy is directly related to the talent agenda,” although she warned of risks to come when the IR35 consultation is published, saying “APSCo maintains that a move to extend recent legislative changes to the private sector at this time is ill-conceived, and we will be sharing this view, and the evidence behind our position, when the opportunity does present itself.”
FCSA’s Julia Kermode was upbeat about the lack of new action on IR35: “With no mention, we hope that it shows that the Government has listened to FCSA’s many concerns and the impact the changes have had on the public sector over the last year and we will continue to make our voice heard on behalf of the UK’s hard-working contractors and freelancers that a private sector roll-out will be hugely damaging for them and the UK economy,” she said. This sentiment was echoed by the Recruitment and Employment Confederation’s Tom Hadley: “We’ve been saying for a long time that introducing changes to IR35 in the private sector would be premature, as the impact of the public sector changes is not yet fully known and there are still issues with implementation that need to be rectified.”
If the cheers for a lack of IR35 changes were cautious, the welcome for changes to training-related tax deductions was full-throated. “The focus on education and skills, including additional funding for construction skills and T-level preparation, are welcome – especially in light of ongoing staff shortages picked up on in our monthly data,” said Mr Hadley, while Ms Hurley welcomed “the explicit recognition that a skilled workforce benefits both individuals and the wider UK economy.” She added that: “Greater support for individuals who want to upskill or retrain can only be good news for the professional recruitment sector, particularly at a time when an increasing number of professionals are choosing to work on a contract basis, without the Continuing Professional Development (CPD) support that is usually associated with permanent employment.”
For Chris Bryce, CEO of contractor campaigning group IPSE, the change is a vindication of one of the organisations long running campaigns. “Not only is it unjust that self-employed people don’t have the same relief for training as employees; our research has also shown that lack of access to training is also one of the biggest factors holding back struggling, vulnerable self-employed people. The consultation on tax-free training is, therefore, cause for celebration for self-employed people across the UK,” he commented.
Freelancers and contractors will no doubt remain nervous about changes to IR35. In the absence of the headlong rush to implementation we saw for the public sector 12 months ago, and with positive news on tax deductions for training costs, perhaps they will also nurture a spark of optimism.