Kingsbridge Autumn Statement 2015 Reaction

Autumn Statement 2015


Despite numerous rumours to the contrary over the past few weeks, professional contractors broadly came out of the 2015 Autumn Statement unscathed (for now at least). Recent reports from HM Treasury had suggested that contractors would no longer be able to work for a single client for an uncapped period and would have to move onto the payroll after one month, but no mention was made of this in the Chancellor’s speech or in the ‘blue book’ released immediately afterwards.

It seems likely that any proposals for changes to IR35 legislation will be pushed back to April 2017. A press release from APSCo, circulated shortly after the conclusion of the Autumn Statement, stated: “It appears that, following the overwhelming negative response from business as a whole and a rigorous press and lobbying campaign by APSCo, the Government has chosen to think more carefully about the unintended consequences of the proposals.”

Samantha Hurley, Head of External Relations and Compliance at APSCo, followed up by saying:

“Of course, the lack of an announcement in the Autumn Statement doesn’t mean that the Government won’t go forward with this proposal in the future, but it does almost certainly mean that it won’t come into effect in April, 2016, which is what we feared.”

Travel and Subsistence

It was confirmed, however, that umbrella company contractors, as well as limited company contractors using PSCs, will have their travel and subsistence tax relief restricted where IR35 applies.

Thomas Wynne, Head of Business Development at Kingsbridge Contractor Insurance, commented: “If the chancellor has indeed left travel and subsistence rules applicable to only those within the IR35 regime it is a welcome recognition to the hundreds of thousands of professional contractors genuinely contributing to and driving forward the UK economy. Many of these contractors incur a huge element of travel and subsistence costs in fulfilling their contracts.”

Autumn Statement 2015

As stated on page 116, point 3.20 of the Spending Review and Autumn Statement 2015 document:

“Employment intermediaries and tax relief for travel and subsistence – As confirmed at Summer Budget 2015, the government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary, such as an umbrella company or a personal service company. Following consultation, relief will be restricted for individuals working through personal service companies where the intermediaries legislation applies. This change will take effect from 6 April 2016.”

Chris Bryce, Chief Executive of IPSE, echoed popular sentiment regarding travel and subsistence tax relief, noting that: “[IPSE] have always been clear that changes to tax relief for travel and subsistence should not penalise freelance businesses. Today’s announcement suggests that these firms will still be able to claim, as can every other business, but this is very much dependent on the outcome of the Government’s IR35 review.”

The Positives

Whilst some are already speculating that the lack of any concrete information on IR35 one way or another will make for an uneasy next few weeks, it could be suggested that its absence may be for more positive reasons.

Steve Wynne, Kingsbridge CEO, noted: “Whilst HMRC is clearly leaving the door ajar for IR35 reform, I believe that the Chancellor has come to see the inherent value in contracting. Coupled with the overwhelmingly negative reaction to last week’s leaked proposals, it seems as though Mr. Osborne has seen the light and recognised the fantastic contribution contractors make to the economy. The fact that the threatened changes appear not to have materialised also suggests that he may well have heeded the calls given to him to by Kingsbridge and trade bodies regarding the need for greater consultation on this key matter. Such consideration was overdue, given that the contracting community has spearheaded the reduction in unemployment in our country over the last 5 years.”

However, despite some sense of uncertainty still being felt in the wake of this year’s Autumn Statement, there were several positive measures announced that are likely to have an impact on contractors across the UK.

£7bn will be put to one side for housing, directly benefiting construction contractors, as well as giving a large proportion of contractors the opportunity to get their feet on the first rung of the housing ladder. The £12bn set aside for work on defence projects will be advantageous to those contractors working in the engineering sector, and the £3.8bn above inflation allocated to the NHS should directly benefit a whole range of contractors from IT and technology workers to those who work in science, nursing, and interim management.

An enormous £61bn will be invested in transport, alongside another £2bn for flood defences – both supporting contractors in the engineering and construction sectors. Education has also been granted £10bn alongside a review of the existing budgeting regime, likely freeing up schools to hire more specialist teachers in the core contracting disciplines. Furthermore, the automotive and aviation sectors will continue to receive support, ensuring a long-term future for engineering contractors.

All in all, based on the available information and against expectation, this year’s Autumn Statement was a positive one for contractors. Of course, more news may come to light over the next few weeks as the contracting community digests exactly what the announcement means for them. We’ll be reporting and updating as the reaction gathers pace.

In the meantime, let us know your thoughts on this year’s Autumn Statement in the comments below, or over on our Twitter, Facebook, and LinkedIn pages. If you’ve got any questions about what insurances you need, or if you’d like to take out a policy, you can head on over to our website or call us on 01242 808740.

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