Despite the Chancellor’s move to freeze the VAT threshold and bring forward the tax-free personal allowance rise, the decision to make IR35 changes to the private sector has come as a disappointment to the IPSE.
The Association of Independent Professionals and the Self-Employed believe that rolling out the controversial off-payroll (IR35) changes to the private sector in April 2020 will have a catastrophic impact on one of the UK’s most productive and dynamic sectors.
IPSE’s Chief Executive Officer, Chris Bryce, commented, “The Chancellor has today forced the self-employed into a holding pattern of despair, as they await the introduction of controversial tax changes which could force them out of business from April 2020.
“The Chancellor’s smash-and-grab approach to taxing the smallest businesses is short-termism on steroids.
“It is a short-term tax grab that will do lasting damage to the economy by taxing out of existence the smallest and most agile businesses.
“These are the very businesses the government and large corporations will need to call upon to provide the specialist skills to navigate our way through Brexit.
“This fresh raid on the self-employed comes only a month after the government backtracked on its pledge to abolish Class 2 NICs, costing freelancers an average of £150 per year.
“The Chancellor’s budget record is stuck on repeat: go for the self-employed, go for the self-employed.”
He added, “The Chancellor says this is about tackling non-compliance, but the government’s idea of what ‘non-compliance’ looks like has been overturned by the courts in 75 per cent of cases in the last decade.
“The off-payroll rules are so complex and crude that genuinely self-employed people will be swept up by the government’s smash-and-grab mentality and in many cases taxed out of operation.
“This will have a chilling effect on entrepreneurialism in the UK: if you’re thinking about striking out on your own, as a white van man or a one-woman band, you’ll always be looking over your shoulder, wondering when the government will be coming after you.
“These measures are also profoundly anti-business and anti-competitive. Large, multinational companies who engage contractors will now have the power to unilaterally alter the tax affairs of the smallest businesses – the self-employed.
“The rules also allow big businesses to push their National Insurance obligations onto the self-employed, who end up being taxed like employees without any employment rights.
“Once these smallest businesses been forced out, the likes of the Big Four service companies – who don’t have to worry about IR35 – will swoop in and pick up all the contracts.