Autumn Budget 2021: what does it mean for contractors?
On the 27th October, the Chancellor of the Exchequer, Rishi Sunak, delivered the Autumn Budget 2021 announcement. The speech emphasised a much more positive message than the previous two budgets held in March 2020 and March 2021, which both focused on the coronavirus pandemic. Sunak began his speech by stating that “Employment is up. Investment is growing. Public services are improving. The public services are stabilising. And wages are rising”.
Sunak went on to announce that this budget will pave the way for a “post-covid era”. Read on for an overview of the key points of the Autumn Budget 2021 that we think contractors should know about.
No mention of IR35 in the Autumn Budget
Once again, there was no mention of the off-payroll legislation, often referred to as IR35, in Sunak’s speech or in the full budget document, despite further calls for the reform to be reviewed. Considering the fact that IR35 was not mentioned in Sunak’s speech in March this year, and that the private sector IR35 reform is now well and truly in place, this lack of mention is not surprising. Notably, the Finance Bill sub-committee is currently calling for evidence on the off-payroll rules in the private sector and how these rules are working in practice. Only time will tell if this will cause a review of the legislation.
Coronavirus and the economy
Sunak revealed that the inflation rate was 3.1% in September, with the Office for Budget Responsibility (OBR) forecasting that that inflation will average 4% next year. According to Sunak, there are two reasons for this rise:
1. As economies around the world reopen, demand for goods has increased quicker than supply chains can react. It will take time for factories to restore full capacity after a year of closures.
2. Global demand for energy has surged, at a time when supplies are already disrupted, which has caused the wholesale price of oil, gas and coal to more than double.
Positively, the OBR has forecast that the economy will return to its pre-covid level at the beginning of 2022 – 2 months earlier than previously thought. Growth this year has been revised from 4% to 6.5%. In addition, in July last year unemployment was forecast to hit 12%. Today, the OBR has forecast unemployment to peak at 5.2%, causing 2 million fewer people to be unemployed than initially predicted.
Sunak announces investment in growth and increased spending
As Sunak alluded to as he began his speech, the Budget aims to invest heavily in future growth plans. These areas of growth will naturally provide more employment opportunities, which hopefully will provide potential work opportunities for self-employed contractors. Read on for an overview of the areas of growth that could affect you.
Sunak pledged £1.7 billion of investment in the infrastructure of everyday life, with £170 million in Scotland, £120 million in Wales and £50 million in Northern Ireland. In addition, the Budget has also set aside £5 billion to remove unsafe cladding from the highest risk buildings, no doubt an ongoing project in the wake of the Grenfell Tower fire in 2017.
2. Opportunities for contractors in Rail and Transport
There will also be opportunities for work in railways and roads, with Sunak promising high investment in these areas. This includes:
· £130 billion investment as part of the National Infrastructure Strategy, in economic infrastructure like roads, railways, broadband and mobile.
· £21 billion on roads and £46 billion on railways to connect towns and cities.
· A new Integrated Rail Plan to improve journey times between towns and cities.
· £5.7 billion for London-style transport systems across Greater Manchester, Liverpool City, The Tees Valley, Yorkshire, West Midlands and the West of England.
· £2.6 billion for 50 local road upgrades.
· £5 billion for local roads maintenance.
· £5 billion funding for buses, cycling and walking.
3. Energy and green energy
If you work in green energy, it could be good news for you as Sunak announced a new investment relief scheme to encourage businesses to adopt green technologies, like solar panels.
Sunak announced various schemes and plans to protect businesses, with the hospitality, retail and leisure getting extra support, with a 50% discount on business rates. In addition, it was announced that business rates would be reviewed more frequently, with a new re-evaluation cycle beginning in 2023.
Other points from the Autumn Budget that could affect contractors
Other points raised in the budget which may affect contractors included:
· Increasing the national living wage next year to £9.50 an hour.
· Increasing the working allowance to support working families.
· Temporary visas to address the driver shortage.
· A target to increase Research and Development investment to £22 billion a year by 2026-27.
· Public sector workers to resume the normal, independent pay setting process.
Support for contractors from Kingsbridge
With no changes to the IR35 legislation, Kingsbridge is here to support contractors with IR35. Our award-winning Kingsbridge IR35 Status Tool gives an instant and automated IR35 result, with any indeterminate results passed to our expert IR35 team for manual review. Once you have your inside or outside determination, you will be able to access a full report which outlines the strengths and weaknesses of your engagement, which can then be provided to your fee-payer or end client if required.
In addition, Kingsbridge can help you with your business insurance requirements. Our comprehensive package policy includes professional indemnity, public liability and employers’ liability. To find out more, get a quote or contact us.