The last fortnight has seen most political parties commit to reviewing the off-payroll reforms due in 2020 followed by some confusion as to the substance of their commitment, and then some attempts to backtrack. Cold comfort then for those contractors who are being affected by their clients deciding to discontinue engaging them via their PSCs, instead their contracts are being terminated in favour of a payroll-based engagement at the same overall assignment rate, i.e. without the usual uplift for employers NICs and overheads. So a double whammy as these contractors are effectively funding the employers NICs as well as the employees deductions. The contractors have a stark choice; either accept what is on offer along with the significantly reduced income, or don’t.
Most contractors I have been talking to will certainly be in touch with whoever their newly elected MP is quick-smart with a view to stopping the next year’s changes. Surely they can’t ignore the very real impact the off-payroll changes are already having on many hardworking individuals? HMRC has often been quoted as saying that the changes should not affect those that are genuinely self-employed, however this is simply not the case in reality. And of course, we are yet to see the full scale of the inevitable increase in tax avoidance schemes that will aggressively target and exploit these workers whose income is reduced.
Whatever the shape of the new Government, you can be assured that FCSA will be actively lobbying for a delay to the off-payroll changes – particularly as we are seeing the unintended consequences happening right now, unfortunately as we predicted.
This is our last newsletter for 2019 (as the next one would be due on Christmas day!) so I wish you all a wonderful festive break, and I look forward to working with you in 2020.
Julia Kermode, FCSA Chief Executive
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