Warn­ing of ‘con­trac­tor ex­o­dus’ over rule change

The Daily Telegraph - Your Money - - MONEY - Sam Mead­ows

The Chan­cel­lor’s at­tack on tax avoid­ance by con­trac­tors will make things harder for the self-em­ployed and could lead them to flee Bri­tain, ac­cord­ing to ex­perts.

De­ter­min­ing a worker’s em­ploy­ment sta­tus is com­pli­cated and is sig­nif­i­cant, as con­trac­tors typ­i­cally pay less tax than full-time em­ploy­ees.

The Bud­get widened the scope of changes to a hated piece of tax law known as IR35, which aims to stop “dis­guised” em­ploy­ees claim­ing they are con­trac­tors to avoid tax.

The change shifts the re­spon­si­bil­ity for de­ter­min­ing em­ploy­ment sta­tus from the con­trac­tor to the em­ployer. Large and medium-sized pri­vate-sec­tor em­ploy­ers will be brought into the net in 2020. Im­ple­men­ta­tion in the pub­lic sec­tor has been strongly crit­i­cised by con­trac­tors’ bod­ies.

Richard Wallen, 61, a con­trac­tor from Hert­ford­shire, said de­ter­min­ing whether you should be an em­ployee was com­pli­cated and that the “whole process needs sort­ing out”.

Dawn Regis­ter, of accountancy firm BDO, agreed. “IR35 has been around since 2000, so the fact we still have cases like some we have seen go­ing through tri­bunals shows it doesn’t work.”

Re­search from Qdos Con­trac­tor, an in­surer, sug­gests that as many as 58pc of con­trac­tors will strongly con­sider leav­ing the coun­try in 2020 when the changes take ef­fect.

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