Contracting Life

2020 in review: What happened to contractors this year?

You may be thinking a round-up of 2020 is the last thing you want to read and, to be completely fair,…

Author Photo by Olivia Bufton

You may be thinking a round-up of 2020 is the last thing you want to read and, to be completely fair, we wouldn’t blame you. But, this is a year that’s gone by in the blink of an eye (seriously, it was March last week!) and there’s bound to be stuff you’ve missed.

For instance, did you know Disney has found a lost song from The Muppet Christmas Carol after 28 years? Or that Nigella Lawson has gone viral for pronouncing ‘microwave’ as ‘meecro-wah-vey’? No? Well, if you missed those titbits of smile-worthy news, imagine all of the important contracting news that may have passed you by – or that you may have forgotten about – amidst the coronavirus-dominated headlines of 2020.

So, we’ve pulled together a round-up of the biggest news stories of the year so you can read them all in one place.

There was a global pandemic

We couldn’t not write about coronavirus here, as much as we’d like not to. It’s the biggest story of the year no matter who you are, where you are, or what you do for a living – and it caused financial problems right across the board, especially for contractors.

The respiratory virus swept across the globe, leaving havoc in its wake and causing the UK to go into a full national lockdown on 23rd March. Vulnerable people were shielding (and some still are), children stayed home from schools and early years settings, and the nation was instructed to work from home.

The introduction of Rishi Sunak’s furlough scheme meant that some businesses shut their doors for the time being until the economy could reopen again… And many contractors lost their incomes overnight.

After pressure from the sector, the Chancellor introduced support for the self-employed, but it didn’t help everyone. Limited company contractors in particular found themselves unable to claim adequate support and tough times were endured by many.

While some contractors were lucky and were able to work throughout (many IT contractors, for instance, were in high demand enabling businesses to convert to home working models), and others were able to start working again from June as the economy reopened, others have seen their livelihoods vanished and are still struggling for work now as we approach 2021.

With the roll-out of a vaccine, things are looking hopeful for the coming year, but it’s certainly been an episode that we’ll all be glad to turn our backs on.

IR35 was delayed

One small positive to come out of the pandemic was the delay of the IR35 legislative reforms for the private sector. Originally due to launch in April 2020, they were pushed back by a year to April 2021 to reduce disruption for businesses at the height of the pandemic.

This has been a silver lining of sorts to contractors and end clients alike, giving them an additional 12 months to prepare for the reforms and ensure that they have all their ducks in a row, including IR35 insurance and a reliable status determination tool.

Of course, with the delay has come rumours and speculation of further delays, or even a cancellation of the reforms. This really is just wishful thinking and our advice at Kingsbridge is that contractors, end clients and recruiters should all work on the basis that the reforms are coming on 6th April 2021.

After all, MPs have voted to set that date in stone now and the Chancellor is going to be looking to claw back as much of the coronavirus deficit as possible, and IR35 is one way to do that.

The Brexit transition period is ending

With COVID-19 dominating the headlines, it’s been easy to forget about Brexit. However, the UK formally left the EU on 31st January 2020 and entered a transition period where our rules remained aligned with theirs while a trade deal was thrashed out between the two. These trade deal negotiations have been continuing in the background all year and at the time of writing this article we know two things:

1. The transition period ends on 31st December 2020

2. A trade deal has not yet been reached with the EU so we could be heading for a No Deal scenario

The transition period ending is going to bring its own issues as rules change around a wide variety of things and we are yet to discover the wider impacts Brexit will have on the economy and jobs. Needless to say, we can expect it to dominate 2021’s headlines for more than a few months.

Other things happened too

Besides these big headline-hitters, other things were also going on that have a direct effect on contractors during 2020.

HMRC has been ramping up its efforts in getting the self-employed to sign up to Making Tax Digital, touted as a way of making the tax system more intuitive, responsive and efficient by allowing people to pay their taxes at intervals throughout the year, rather than doing one self-assessment at the end of the tax year and then having to pay in large lump sums.

Making Tax Digital for VAT and Making Tax Digital for Income Tax are both allowing people to sign up voluntarily now, before the mandatory sign-up dates of April 2022 and April 2023 respectively.

The big news around the Loan Charge, meanwhile, is that a campaign to judicially review it under EU law was well on its way to its target. This is one to watch in 2021, as it’s unlikely the government will change its mind on the Loan Charge without being forced.

So, there you have it, 2020 in a nutshell… At least as it pertains to contractors. We’ll be back in the coming days with news on what contractors can expect in 2021, but in the meantime all that remains is to wish you a merry Christmas, and a happier and brighter New Year.

Related topics

Contracting Life Contractors