Following The Conservative’s deal with The Democratic Unionist Party (DUP), leading contractor tax adviser, Qdos Contractor, has highlighted the opportunity the new government has to make radical changes to the current tax system, and rethink the effect it has on the UK’s 2 million freelancers and contractors.
Qdos Contractor CEO, Seb Maley outlined a number of measures the new government should consider in order to build a fairer, simpler tax system for freelancers:
On changing attitudes, Seb Maley comments, ‘First and foremost, attitudes towards the growing number of UK freelancers and contractors must radically change when it comes to tax. The vast majority of independent workers are not tax dodgers and do not choose to work this way to unfairly exploit the system. In times of uncertainty, the UK’s independent workforce has shown its value to the economy, contributing £119 billion last year. Why target them, punish them and tarnish their hard-earned reputation?
‘It’s time tax worked for everyone. And the government has a fresh opportunity to work with freelancers and contractors to build a fairer, smarter and simplified tax system – and one which the independent workforce, the economy and government themselves will benefit from.’
Advising against private sector IR35 reform
‘Recent public sector IR35 changes were rushed through, with contractors, public sector employers and recruitment agencies still largely confused by the situation. This hasn’t been helped by HMRC’s unreliable ESS Tool used to make IR35 determinations, along with a number public sector employers making blanket IR35 determinations.
‘We urge government to not to introduce similar reform to the private sector. Given that over half (51 per cent) of public sector contractors who have now been placed inside IR35 are planning to leave their roles, a similar situation in the private sector could threaten this way of working entirely, putting strain on the thousands of businesses who rely on the independent workforce.’
Revoking dividend taxation changes
‘In this year’s Budget, tax-free dividend allowance was cut from £5,000 to £2000. Given the raft of recent controversial tax changes, reversing this decision would at least give UK freelancers and contractors some indication that their contribution to the economy is valued by government, and they can benefit from taking on the risk of running a business.
‘This would go some way to restoring the independent workforce’s waning confidence in government, not to mention win back the support of a group of voters growing in size and influence.’
Calling for the alignment of tax and NIC
‘An ongoing commitment to aligning tax and national insurance contribution would simplify what has become a complicated tax system. With a number of different payments and deductions, aligning tax and NIC would play a huge part of reducing the growing administrative burden on businesses of all sizes.’