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
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
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.
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
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:
billion investment as part of the National Infrastructure Strategy, in economic
infrastructure like roads, railways, broadband and mobile.
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.
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
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
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.