The contracting landscape is one which has changed significantly over recent years, with an increase in the number of people choosing to work for themselves forcing successive governments to adapt and accommodate the needs of independent professionals.
One of the major factors in the way that contractors and other self employed individuals have shaped policy has been the ongoing need for the skills and experience that the flexible workforce brings to businesses throughout the UK. Without independent professionals, many businesses would have been unable to expand, diversify or fill the positions they have had vacant, as the news this month shows.
Knowledge economy flourishing with contractors filling vital roles
The Knowledge Economy, those businesses which rely on intellectual capital to make them profit, is making a huge contribution to the overall health of the UK’s finances. FinTech, TV and film production, aerospace and pharmaceuticals are just some of the sectors which are doing particularly well and contributing to recently reported figures that suggest the knowledge economy is generating new business at four times the rate of other sectors and industries.
Many commentators believe that this is in no small part due to government stimulation initiatives, such as offering tax credits to businesses undertaking work in research and development. The field is a particularly lucrative one for contractors, given the speed with which projects are undertaken, making it an opportunity-rich time for independent professionals with the right skills.
With the EU referendum looming and many experts speculating on the implications of a Brexit, what could happen if we stay and the various sectors that are likely to be affected by the uncertainty until the votes are in, contractors are reassured by ongoing demand for their skills.
However, there are some issues which are never far from the headlines, and IR35 is one which remains controversial, even after years of debate and decision-making.
HMRC’s IR35 figures questioned
As one of the most hotly debated topics amongst contractors, and one which has inspired significant concern amongst both independent professionals and those who hire them, IR35 has long been one of the most analysed pieces of legislation of recent years.
One result of this analysis has been the discovery that HMRC have been using questionable figures when calculating the rate of compliance amongst contractors in the public sector. Specifically, a Public Accounts Committee have released a report which suggests that the number of compliant contractors is significantly higher than the tax-man has claimed, particularly around the time of the 2016 Budget when it was suggested that only 10 per cent of contractors were compliant.
With ongoing speculation about the results of the EU referendum, plenty of people are still undecided about which way to vote, not least because they are finding it hard to ascertain what the impact of a Brexit would be on them. With changes already being made to the way international employees must be treated, the way the UK interacts with the rest of the world will definitely be changing whatever the outcome. Meanwhile, closer to home, all eyes are on HMRC’s plans for the digitisation of the self assessment tax system with some concerned that a new system will not be as user friendly as the department claims.
What will happen to contractors in a Brexit
The relationship between the UK and the rest of Europe might have weathered some tough times over the years but the prospect of a Brexit has some commentators concerned about the impact that a ‘leave’ vote could have on the UK’s economy. Any change to the status quo is likely to cause some degree of uncertainty, but for the time being it appears that there is no significant impact on the UK’s businesses. Many sectors are still actively recruiting contractors, with the financial services sector enjoying a bit of a boost after David Cameron’s negotiations with the 27 member states to secure more protection for financial institutions.
The hot topic of this month is the impending EU referendum, and with both sides presenting their arguments in the hope of winning over voters, financial experts are making their predictions as to what could happen in the event of a ‘Brexit’. However, even if the status quo remains, the month leading up to the vote are wreathed in uncertainty, meaning that businesses are trying to avoid unnecessary expenditure until they know the outcome, which could be good news for the flexible workforce and those who are able to offer their expertise for the short term.
Contractors optimistic in run-up to referendum
The Recruitment and Employment Confederation have released the figures from their monthly Job Outlook survey, and the timing means that the results reflect the feelings of recruiters who are preparing themselves for the results of the EU referendum. Despite significant uncertainty over the future of the UK, whether or not we remain in Europe, the majority of contractors are confident about their prospects with 90 per cent believing that hiring confidence will improve or at least remain the same over the coming months. This may well be as a result of the belief that opportunities for contractors are on the increase as businesses are keen to get ahead of the game and bring in contractors who will help them to innovate and improve their services.
In the aftermath of the chancellor’s budget announcement, many people are keen to ascertain what impact the legislative changes will have on them. Contractors are one of the groups who are likely to see significant changes to the way they work once the proposed changes to the way personal service companies will operate take hold, so they are keen to establish exactly what the future looks like for them.
Budget predictions hotting up
As the date of the 2016 Budget approaches, the speculation as to what taxpayers can expect from George Osborne’s announcement is making headlines. The most significant, at least as far as contractors are concerned, seems likely to be the proposed changes to the way public sector contracting will be managed through Personal Service Companies.
Currently, the onus is on the staff themselves to prove that they are compliant to their clients, but many people are expecting a change to be introduced which will shift responsibility onto the client, according to an article in the Sunday Times. This comes despite the Treasury’s own statistics showing that they believe that 95 per cent of PSCs are operating legitimately, causing some degree of controversy amongst those who will be most affected.
Those who work for themselves are always keeping an eye on the news to check whether planned changes will affect them, and when there is a big announcement such as the Budget imminent, there is always plenty of speculation. Those who work for themselves will always hope be acknowledged, whether that’s through tax breaks or additional benefits, but will the dreams of the independent workforce be realised?
Experts make predictions about Chancellor’s announcement
With the 2016 Budget announcement looming, plenty of people will be waiting with baited breath to see how their sectors fare when the Chancellor sets out his plans for the future. While there is still time to make changes, those organisations which lobby the government on behalf of their members are attempting to put pressure on George Osborne to ensure that they will not be forgotten when it comes to making legislative changes. Travel and subsistence will be one of the main issues that will draw attention as the critics of the planned changes hope that George Osborne will change his mind about their abolition.
When looking to make the move to contracting, there are a lot of different aspects to look into, from getting a contract,writing a contractor CV to actually forming your company and much more. But why should you move from permanent to contracting?
When most people start thinking about contracting, the most obvious benefits are the increase in pay, flexibility and work / life balance. SJD Accountancy have the 5 reasons why you should make the move to contracting.
Contractor rates of pay can land anywhere between £250 – £1000 per day, depending upon your experience and industry. To find out an estimation of your daily rate, take a look at our take home pay examples.
Contractor’s are paid a higher rate than almost all permanent employee’s because their skill sets are very industry specific and help to fill a knowledge gap in the workforce.
Each contractor is different and the more experience you have as a contractor, the better your chances of commanding a higher daily rate. Their rate of pay is higher because contractors are flexible workers and most of the time only work on 3-6 month contracts.
As the dividend tax changes draw closer, those who are going to be affected are increasingly concerned that the proposals demonstrate a lack of understanding about what it’s like to run your own business on the part of the chancellor. Some believe that a thorough overhaul of the taxation system is the only way to resolve the issues that prevent employees and independent professionals from being able to operate on a level playing field, but whether that’s likely to happen or not is a matter for debate.
Chancellor’s dividend payments antagonise critics
The planned changes to the way dividends are taxed have attracted a significant amount of criticism from those who believe that this will further disadvantage those who work for themselves. This has been fuelled by the knowledge that George Osborne himself will be benefiting from a £1,200 dividend payment from his family business, a company which hasn’t paid a single penny in corporation tax over the last seven years. This has prompted accusations that the chancellor’s ability to understand the impact of his proposals is limited by his lack of experience when it comes to working for himself.
As the financial year draws to a close, there are always jobs to be done to ensure that your finances are in order. For those who are super efficient, April is the time to complete their self assessment tax return, but for contractors, April 2016 means a lot of changes and being prepared could save an awful lot of money.
HMRC define SDC and attract criticism from experts
Many contractors are eagerly awaiting the end March when the promised guidelines for supervision, direction and control will be published by HM Revenue and Customs. The thorny issue of what constitutes SDC has been the subject of much discussion over recent months, not least because there is some concern over the manner in which the new travel and subsistence expenses rules will be applied. Despite plenty of advice having been given to the government on this matter, their most recent efforts to define SDC have been widely panned, so the end of March could see an end to the significant speculation on the matter.
Anyone starting a business before the internet age would have had to go through a potentially long and drawn out process of research and phone calls just to get themselves registered as self employed. However, the advent of increasingly well-connected technology means that now all these jobs can be completed online within minutes, not to mention the wealth of information available to anyone who wants to ensure that they are compliant with all the procedures involved in working for themselves. […]