It's been a tough couple of years for contractors in the UK.
Rising inflation, interest rates, and living costs have strained contractor finances and tightened the job market. It was no surprise then that Jeremy Hunt's Autumn Statement, delivered on the 22nd of November, generated significant interest from UK contractors.
The signs were positive after Hunt, the Chancellor of the Exchequer, declared that the statement would focus on stimulating economic growth and encouraging people back into work.
So, now that we've had the chance to digest the contents of the autumn statement properly, what does it mean for freelance contractors in the UK?
NIC Cuts Come as Welcome Relief for Some Contractors
Freelance contractors provide their services in various ways and, depending on their status, the Chancellor's statement offered differing results.
At Champion Contractors, we support freelance contractors of all types, so we've outlined our thoughts on the statement's impact for each type of contractor below.
For those earning the minimum wage, an increase from £10.42 to £11.44 for people aged 21 and over was a welcome inclusion.
In addition, the statement confirmed that from the 6th of January 2024, Class 1 employee NIC will be reduced from 12% to 10%. The reduction will bring instant relief for umbrella contractors by providing a welcome increase in take-home pay.
Self-employed freelancers were also the beneficiaries of NIC cuts, with Class 2 NICs abolished and Class 4 NICs reduced from 9% to 8%, effective from the 6th of April, 2024.
These NIC changes should result in self-employed freelancers seeing a much-needed increase in retained profits.
For personal service company (PSC) contractors, financial relief was scarce. There were no tax cuts of note to help PSC contractors, although there was support for SMEs in the form of capital expenditure tax relief and R&D tax relief.
Significantly, however, was confirmation that the government will change legislation to address the Off-Payroll Working (OPW) reform legislation's double-taxation problem. This OPW legislative change is unlikely to be a catalyst for a significant change in the engagement of PSC contractors. Still, it could give hirers more confidence when considering using PSC contractors.
Autumn Statement Plans for Investment Bring Hope for Contractors
If the government's plans to stimulate investment and growth in UK businesses come to fruition, UK contractors can look forward with hope.
Investment and growth will likely mean a demand for skills and a buoyant job market where freelance contractors can prosper.
Actions to encourage compliance in the umbrella sector and ease the risk associated with engaging outside IR35 PSC contractors should promote the use of freelance contractors to UK businesses.
For a detailed overview, you can see our report on the autumn statement here.
For other news and updates, visit our website at https://www.champion-contractors.co.uk/ or follow us on LinkedIn.
Alternatively, contact the Champion Contractors team on 0161 703 2549 or email info@championcontractors.co.uk.