Contractors’ Questions: What will Budget 2019 contain for contractors?
Contractor’s Question: I was sure that the government would have wanted to get Budget 2019 out of the way, long before the October 31st Brexit deadline. I’ve even booked my holidays accordingly! So I’m a bit put out by the Budget date and don’t want to be further put out by any curve balls on November 6th. So what is at least likely for the contractor sector please?
Expert’s Answer: It’s no real surprise to me that the government has set a date for Budget 2019 after the Brexit deadline -- it really doesn’t make sense to hold it any earlier when the UK’s withdrawal from the EU is still far from clear. The government simply cannot afford any distraction between now and October 31st.
As to what Sajid Javid’s first Budget as chancellor will mean for contractors, his private sector background should be somewhat reassuring.
IR35 changing: plan for it
But I don’t think we will see a reversal of the proposed April 2020 changes to IR35, despite his comments back in the late noughties. So despite what many are hoping for, I think the government are too entrenched in their view that the changes are necessary and blinded by their belief that the IR35 reforms in the public sector in April 2017 have been a success.
It’s always possible, of course, that we are dealt a “curve ball” on November 6th. But my advice to contractors (and to agencies and end-clients for that matter) is to carry on preparing for the new reality of limited company contracting from April. It is more important than ever that all parties engage with each other, including with their professional advisers, to ensure that they are ready for these significant changes.
The best delay argument?
End-clients, in particular, should not underestimate the size of the task ahead in preparing themselves for being responsible for the IR35 decision-making and the associated processes. Oh, and all this is hitting businesses alongside them having to understand the implications of Brexit on their businesses. That seems the strongest argument, in my view, for any suspension or delay to extending the off-payroll rules.
Aside from IR35, what else might contractors expect to see? I think it likely the chancellor will be at pains to ensure that the UK looks attractive to business. The government has previously confirmed that the corporation tax rate will reduce to 17% from April 2020, and I expect this promise to be kept. If it is, this will represent good news for contractors continuing to use their limited companies – it may even be a justification which Mr Javid may use, even mention, for introducing the off-payroll rules from the very same month.
Contractors will also be keeping watch of their personal allowances at Budget 2019. Fortunately, I don’t think we will see any changes – but that also means no increases either. The government has already achieved a personal allowance of £12,500 and a higher rate tax threshold of £50,000 -- levels they committed to achieve by 2020/21. It seems counterproductive for them to add to their own plate when there’s so much on it already!
Budget 2019 webinar for contractors
Regardless of the results of the 2019 Budget for the contractor sector, we will be sharing our reactions and analysis with ContractorUK readers in a free-to-attend webinar following the chancellor’s announcements. The webinar will be taking place on November 11th at 12pm, and you can register here.
The expert was Helen Christopher, operations director at contractor accountancy firm Orange Genie.