Change to public sector rules undermines otherwise positive Budget

Responding to the Chancellor’s Budget, IPSE Chief Executive Chris Bryce commented:

“The Chancellor announced a number of measures today which are likely to impact independent professionals and the self-employed. His move to extend rules for off-payroll working in the public sector will create confusion and disruption. The engaging department or agency will be made responsible for any tax liability. This will result in genuine businesses having to jump through numerous hoops and will see the cost of engaging contractors increase. It will endanger the delivery of vital public services and important projects like HS2.

“However, the Chancellor did make some positive announcements. Abolishing Class 2 NICs, cutting Corporation Tax and introducing the Lifetime ISA will make a positive difference to the UK’s 4.6 million self-employed.

On personal service companies

“We’re deeply disappointed the Chancellor has ignored the concerns of people working through personal service companies, with no desire to become employees. Previous rules for off-payroll working in the public sector have already created a lot of disruption to contractors working in Central Government. IPSE is very concerned the new rules will make matters worse.

“HMRC have told us they intend to consult closely with us over these new rules. We will work tirelessly to ensure they are fair for contractors in the public sector. We have been told by HMRC that these new rules will not apply to the private sector. The Government must keep its word on this and we would firmly oppose any future change to this position.

"If the rules aren’t clear or implemented properly there’s a huge risk of discouraging specialist contractors from lending their expertise to the efficient running of public services and the delivery of large-scale projects.

On the Lifetime ISA

“The Lifetime ISA is a really positive development that addresses the main concern of many self-employed people looking to save for the future. When you’re self-employed your income can fluctuate. The Chancellor stated the Lifetime ISA will not overly penalise people for removing money if they put it back in at a later date. This enables more self-employed to save for the future, something IPSE called for ahead of the last election.

On infrastructure spend and the Northern Powerhouse agenda

“Pushing on with large-scale infrastructure projects such as HS2, Crossrail 2 and the Manchester-Leeds high speed rail link will significantly increase UK productivity – and the specialist skills and expertise of the self-employed will be absolutely integral to making this happen. The Government must however be aware of the problems changes to public sector rules for personal service companies will have on delivering these projects as planned.

On abolishing Class 2 NICs

“The Chancellor’s move to abolish Class 2 NICs is a long overdue and welcome step.

On house building

“Increased funding for house building will be welcome news for those trying to get on the property ladder. The UK’s 800,000 self-employed construction workers will play a huge role in delivering these new homes.

On Corporation Tax

"Cutting Corporation tax is a welcome move to support businesses of all sizes. It makes UK firms more competitive than most of our competition in Europe and we hope the Chancellor will continue to follow this agenda in future Budgets.

On the tax increase on insurance premiums

“Increasing the tax rate on insurance premiums is just another additional cost to doing business if you work for yourself.

On maternity pay

“The Government missed the perfect opportunity to back self-employed mums by giving them the same maternity pay as employees. This measure was recommended in the recent self-employment review. The UK’s 270,000 freelancing mums will feel overlooked.”

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