31st January 2019
From Brexit to IR35 changes to the private sector, Contractors have been through some monumental changes over the last year. Now that we’ve entered 2019, it’s time to prepare for the challenges that are on the horizon for Contractors. We’ve created a quick guide to what changes to contracting you can expect in the next few years, and how you can prepare for it.
As a Contractor in the UK, you’re likely wondering (worrying!) whether Brexit will have a positive or negative impact on your contracting career. Well, you’re not the only one. As the full implications of Brexit have yet to come to light, Contractors in all sectors remain unsure of what awaits them. However, we can encourage you that the contracting market appears to be going strong despite the uncertainty.
Over 15% of the UK’s working population declare themselves as self-employed. It is also estimated that nearly half of the UK’s workforce will be working for themselves within the next decade but, with Brexit looming, that might not be the reality…
Like yourself, your clients also don’t know what will happen post-Brexit. Therefore there may be a delay when it comes to investing in external providers of services until Brexit consequences are made clear. It could be that businesses decide to eliminate some Contractor positions or restrict the amount of time that Contractors can work before they are replaced by permanent employees. There is also the possibility that business will choose to move out of the UK which could cut down the number of jobs available.
However, there is another side to the Brexit coin. The uncertainty could mean that many current Contractors opt for permanent work and the guarantees it brings instead, which could make you a rare and valuable contracting resource. An article by Entrepreneur found that the appeal of the UK after the Brexit vote hasn’t changed, so businesses may still looking to invest in valuable UK Contractors.
Of course, as a British Contractor who is subsequently part of the EU, it means you can live and work anywhere within Europe. There are currently around 45,000 Contractors who live and pay tax in Britain but work in mainland Europe. However, with a Brexit deal likely to prevent that benefit (or certainly make it more challenging), it may mean that you will need to get a working Visa to carry out contracts in Europe. It may also mean that your European clients look at hiring Contractors from countries still remaining in the EU ahead of those from the UK, as it is likely to require less paperwork for them.
At the time of writing, it seems as though there will be a transition period until the 31st of December 2020. This gives Contractors and businesses the opportunity to both adjust and prepare for the resulting changes.
Essentially, the ambiguity that currently surrounds Brexit makes it very difficult to predict the future of contracting in both the UK and Europe. Our best advice is to remain abreast of any changes relevant to you and prepare for some challenges, as well as for the potential rise in opportunity.
Making Tax Digital (MTD) is an HMRC initiative that will revolutionise the UK tax system and potentially bring an end to self-assessment. Its aim is to make tax administration more effective, efficient and easy for the taxpayer (a welcome change!) by implementing a fully digitised tax system by 2020. The change will affect businesses as well as the self-employed like you.
To prepare for MTD, you will need to keep HMRC informed of your business’s finances digitally through some form of accounting software. If you already use software to keep your business records, check your software provider’s plans to introduce MTD-compatible software. If you don’t have MTD friendly software yet, here is a list of compatible software suppliers.
During the 2018 Autumn budget, it was announced that IR35 will be rolled out to the private sector in April 2020. This change means that you may be liable to pay the same tax and national insurance contributions as regular employees, despite being a Contractor, as companies might decide to blanket all Contractors as inside of IR35.
As you’ll be well aware though, as a Contractor, you don’t receive the same benefits as regular employees – such as sick pay or death-in-service. We wrote an article about the best ways to protect yourself in light of changes to IR35, which you can read here.
If you are unsure about how to protect yourself in light of the changes that are coming to contracting in 2019 and beyond, please do get in touch and we will do our best to help you.
All content is accurate at the time of publication
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