As the general election on 8th June fast approaches, all three of the main parties have now published their plans for the future if they should be fortunate enough to take power. So, we wanted to pass on any relevant information relating to contractors – and this is how it’s looking.
The Conservatives say they will maintain their plans for corporation tax, reducing it to 17% by 2020. They will not increase VAT, and will keep their promise of an increase to £12,500 for the personal tax-free allowance. No mention on National Insurance contributions – however, they say they want to ‘simplify the tax system’. Also no mention of the already announced cut in dividend tax allowance, but it’s likely this will still go ahead, based on comments by officials when the Finance Bill was passed. Teresa May also plans to provide seed funding for new schemes designed to bring in older professional workers from other industries, to support the public sector.
For companies with annual profits of less than £300k, Labour plans to reintroduce the lower ‘small profits’ corporation tax rate. In 2018/19 this would create a small profits rate of 20%, rising to 21% in 2020/21. Labour has said it will not increase VAT and NI, but will raise taxes for those earning £80k+ to 45p and for those earning £123k+ to 50p. Jeremy Corbyn plans to ban umbrella companies and set up a ‘dedicated commission’ to modernise employment status laws. He would also change legislation to assume that workers are ‘employees’ unless employers can prove otherwise. End-user clients and agencies would be responsible for enforcing agency workers’ rights, and there are plans to introduce a statutory definition of employment status – as called for by IPSE.
The Liberal Democrats plan to reverse the cut in corporation tax, putting it back up to 20% from 17%, and would also bring in a 1p increase in dividend taxation. They also intend to reverse four Tory tax policies – Entrepreneurs’ Relief; CGT cuts/extended CGT relief; the Marriage Allowance and raising the IHT threshold. The Lib Dems also intend to reform corporation tax so it ‘benefits the smallest companies’, shifting the current profit-based system so it takes sales and turnover into account. Tim Farron has also said he will modernise employment rights to ‘make them fit for the age of the gig economy’.