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Welcome

 
 

Yesterday’s official ONS statistics once again show record employment rates with 76.3% of the UK’s workforce in employment, up 0.6% year on year and up 0.5% compared to the last quarter. Self-employment rose by 71k to 5m, which is equivalent to 15.2% of the workforce being self-employed, which is an all-time high. Whilst it is good news for businesses and the economy that so many people are choosing the flexibility of self-employment, the impact of forthcoming off-payroll legislation on the private sector remains to be seen. We are all too aware of the many situations where clients are making supply chain decisions to not engage PSCs, leaving the affected contractors no choice but to accept reduced income if they wish to continue working for their clients. And of course, right now there is no legal redress because clients do not have to provide any sort of dispute resolution process until after 6 April 2020.

People facing the likelihood of reduced income may well be tempted by tax avoidance schemes which are already aggressively targeting contractors with promises of unrealistic take-home pay, under the guise of supposedly HMRC approved / HMRC compliant schemes. It is fortunate therefore that many end-clients and recruitment businesses are insisting on FCSA accredited providers in their supply chain, so that they can protect their contractors from being duped into such schemes and also minimise their Criminal Finances Act risk of failing to prevent tax evasion.

No doubt anyone reading this newsletter will already be aware of the off-payroll legislation “review” that is underway. FCSA is actively engaging in this review which focuses on the implementation of the changes but does not seek to review the actual changes themselves. It seems to me therefore almost inevitable that the changes are coming in April, so any affected businesses that haven’t yet considered the impact must start preparing urgently.

 

Best wishes

Julia Kermode, FCSA Chief Executive

 

 

In this Issue

News | Government, Policy & Technical | Legal Update | Market Analysis | Media Coverage | Upcoming Events | Accredited Members Directory


News

Highest paid workers put in the longest hours

Research by the Resolution Foundation think-tank suggests that Britain’s highest-paid workers are also working the longest hours. This is a complete reversal of earlier working patterns when the least-qualified workers and lowest earners worked the longest. The report showed the average working week has increased by 40 minutes since 2009. The longest hours are worked by people inmanagerial roles and skilled trades, whereas the shortest hours are worked by people in the service sector such as hospitality, retail, cleaning and care.  

Men have always worked longer hours of paid work than women, and the gap continues to be more than 9 hours per week. The proportion of workers who are women has risen from 40 per cent in 1979 to 47 per cent today. This reduces average working hours because women tend to work shorter hours than men (27.5 hours, compared to 36.9 hours), although women’s hours have been slowly getting longer.

 

Almost 22k retail jobs were lost during 2019

In 2019 21,826 retail staff were made redundant, which is 945 more than in 2018 according to a report by ABC Finance. In comparison, there were a recorded 20,881 job losses in 2018 and just 6,884 in 2017. The retail areas hit hardest by administration between 2010 and 2019 were clothin (41%); household essentials (19%) such as furniture, plumbing and electricals; and general shopping (10%).  Those areas lesser affected were beauty and accessories (5%); food stores (5%), other – pet shops, stationers and travel agents (5%), restaurants – chains/cafes (4%); and gift stores (4%).  ABC Finance’s research also highlighted the closure of 9,000 physical UK locations and more than 125,000 redundancies in the last decade from 2010 to 2019. The retail closures have a knock-on effect on the UK’s economy as it generates 5% of the UK’s GDP, worth £1.5bn.

 

Half of UK workers will request a pay rise this year

Half (49%) of UK workers intend to ask their boss for a pay rise in the next 12 months, according to research from Robert Half UK. The average UK worker intends to ask their boss for a 6% pay rise. This would equate to an increase in the average weekly wage from £585 to £620 for a full-time employee and an increase from £197 to £209 for a part-time employee.

Men are more likely than women to ask their boss for a salary increase (56% versus 44%) while workers between the ages of 25 and 34 are the most likely to ask for a pay rise (58%). According to the research, it takes an average of four months for employees to work up the courage to ask for a pay rise. The top three reasons as to why people had delayed asking for a pay rise were: waiting for a performance review (46%), worried that their employer would say no (34%), and workplace cultures making it difficult to ask for a pay rise (24%).

 

Accounting is stressful for Micro and Small Businesses

According to research by Starling Bank, micro businesses spend 10 weeks a year trying to sort out their finances, accounting compliance being one of the most stressful tasks. The average micro business works 79 hours per week, of which 15 are spent on financial administration – equivalent to 19% of their business time. Accounting was viewed as the most stressful part of running a business and a third (32%) of micro owners stating that this eats into their non-working time. Sole traders spending almost a third (31%) of their labour time on financial admin work, and companies with 1-4 employees devoting a quarter (25%) of their time to this area. Tax compliance is another area where micros are concerned that they will trip up over complex laws and face HMRC penalties, while changes to VAT reporting have also had an impact under Making Tax Digital for VAT.

 


Government, Policy & Technical

HMRC issues off-payroll factsheet for contractors

HMRC has issued a factsheet for contractors which aims to inform them about the off-payroll changes that are set to come in April 2020. According to the factsheet, HMRC will not use information resulting from the changes to open a new enquiry into contractors’ previous years tax unless there is reason to suspect fraud or criminal behaviour. In addition, the factsheet points out that there is no relationship between being inside IR35 and any entitlement to statutory rights, i.e. contractors will be taxed as an employee but without any benefits of such. The factsheet also states that after 6 April contractors will be able to dispute their client’s IR35 determination, which is of little comfort to all the contractors currently receiving IR35 determinations without any opportunity for redress.

You can read the factsheet here >

 

HMRC issues guidance on changes to the loan charge

Following the recent review by Sir Amyas Morse, HMRC has now updated their guidance on the loan charge and published draft legislation with explanatory notes. The loan charge will now only apply to loans made on or after 9 December 2010. People affected can choose to either include all of their outstanding loan balance in their 2018-19 tax return, or spread it evenly over 3 tax years (2018-19, 2019-20 and 2020-21). Anyone wanting to spread the balance will need to complete the additional information form and make a valid election as part of this form before 30 September 2020. 

Individuals who earned less than £50,000 in the tax year 2018 to 2019 and have no other source of wealth can agree a payment plan with HMRC to spread the balance over at least 5 years. Anyone that earned less than £30,000 can agree a payment plan of at least 7 years.

You can read the full guidance here >

 

Scottish budget scheduled for 6 February 2020

It has been confirmed that Scotland will go ahead with their budget on 6 February 2020. Scotland’s Finance Secretary, Derek Mackay, said it would be impossible to wait for the UK budget on 11 March as Scottish councils and public services need clarity about funding before that date. The timetable will enable Holyrood to approve their budget bill and gain royal assent before the new tax year in April. However, there is a possible concern that any major personal tax measures announced in the UK budget would be difficult for the Scottish budget to pre-empt, meaning that Scottish taxpayers might be taxed differently to taxpayers in the rest of the UK.

 

HMRC highlights the most bizarre excuses received from taxpayers

To wrap up the decade, and with 2 weeks to the self-assessment deadline, HMRC has highlighted 10 of the most weird and wonderful excuses received from customers who missed the deadline over the last 10 years. In reverse order, the excuses are:

  • Caravan rental for the Easter weekend;
  • I was up a mountain in Wales, and couldn’t find a post box or get an internet signal;
  • My dog ate the post … again;
  • Claiming £4.50 for sausage and chips meal expenses for 250 days;
  • My hamster ate my post;
  • I’ve been cruising round the world in my yacht, and only picking up post when I’m on dry land;
  • A music subscription so I can listen to music while I work;
  • Pet food for a Shih Tzu ‘guard dog’;
  • A DJ was too busy with a party lifestyle – spinning the deck….in a bowls club;
  • My mother-in-law is a witch and put a curse on me;

All the excuses and expenses listed above were unsuccessful.


Brabners LLP Legal Update

 
 

Is Veganism a protected characteristic under the Equality Act 2010?

Under the Equality Act 2010 it is unlawful to harass or discriminate against somebody in the workplace in relation to their "religion or belief". Religion or belief is one of nine "protected characteristics" covered under the Equality Act.

 Read on to find out more >


Market Analysis

Notable shifts in contingent working by occupation

In the most recently available comparative data showing year-on-year changes in self-employed (+61k / +1.3%) and temporarily employed (-144k / -9.2%) worker numbers (July 2018 - June 2019), there are some key changes by major occupational group.

Notably in the no skills area there was a year-on-year rise in temporary employment, between July 2017 and June 2018 and July 2018 and June 2019. In contrast, self-employed numbers fell in just four occupational groups, albeit notably in two. Numbers in administration & secretarial fell by -20k (-13%), in caring, leisure and Other Services by -6k (-2%), in sales & customer service by -10k (-13%) and in elementary occupations by 5k (2%).

 

 

Media Coverage

ContractorUK
Chancellor sets Budget 2020 for Wednesday March 11th
Read Article >

Staffing Industry Analysis
Government launches review of changes to IR35 reform
Read Article >

Recruiter
Not enough time for full off-payroll review say industry bodies
Read Article >

Startup Donut
All eyes on Boris Johnson over the issue of IR35
Read Article >

Smallbusiness.co.uk
More than four in 10 businesses could phase out contractors due to IR35
Read Article >

Global Recruiter
Government review branded ‘meaningless’, ‘inadequate’ and ‘too late’.
Read Article >

Accountancy Age
IR35: Four out of ten companies considering dropping contractors
Read Article >

Financial Times
Main parties pleaded to review IR35 reforms after election
Read Article >

Recruiter
Government to name and shame head of supply chains for poor employment practices
Read Article >

Working Mums
Take time now on IR35 or you could lose out later, employers warned
Read Article >

Information Matters
Advice for contractors choosing an umbrella
Read Article >

Smallbusiness.co.uk
Over half of self-employed don’t even know what IR35 is
Read Article >

ContractorUK
Freelance body rubbishes new CEST for omitting Mutuality
Read Article >


Upcoming Events

 
 

Recruitment Agency Expo
4th & 5th February 2020
Olympia London

FCSA will once again be exhibiting at the Recruitment Agency Expo in London. You can visit us on stand A9.

In addition to us exhibiting, our chief executive, Julia Kermode will be presenting on Day 1 in Theatre 2 at 16:15. Join Julia as she discusses IR35 and off-payroll reforms, how to spot a dubious “solution”, managing your supply chain and Key Information Documents.

It is free to attend. To register as a visitor, click here >
To book to hear Julia’s presentation, click here >


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