Boris Johnson and the Contracting Environment
Few were surprised when Boris Johnson won the Conservative Party election to become the next Prime Minister. Although elected on his promise to get a better Brexit deal than the one Theresa May negotiated, Brexit is not the only issue facing the new PM. During the run in to choose from the final two candidates, a group of people speaking on behalf of the contracting community petitioned both candidates to act on several concerns of the contracting community. It accused Conservative administrations since 2010 of engaging in a “War On Contractors”.
The Contracting Issues Facing Boris Johnson
Now Mr Johnson is in office and has assembled his team, the call to change certain policies have been renewed. Some in the contracting sector welcomed Mr Johnson’s election. However, this welcome is tentative and cautious, especially concerning statements Mr Johnson made during the leadership campaign and since his election win. In a statement in late July, Contractor UK stated that many feel Johnson’s government should prioritise clearing obstacles for contractors.
The Loan Charge
One of the first moves for the contracting industry was to call on Mr Johnson to launch his long-promised review of The Loan Charge. This is a tax placed on loans the clients lend to contractors but one which the government feels were never intended to be repaid. The charge was announced in the 2016 budget and came into effect in April 2019. It applies to all loans going back to 1999 that have not yet been repaid.
This is where a contractor is an employee in all but name. They have a self-employed status but due to the nature of the contract, unable to work for any other client or refuse work. This came into effect in 2000 under the Blair administration to crack down on tax and NI avoidance by businesses. Boris Johnson has not offered an opinion on IR35 to date, but new Chancellor of the Exchequer Sajid Javid has not been silent. He feels the law is “silly” and promised to abolish it.
Tax Threshold Debate
One issue on which Mr Johnson has commented is the top rate of tax threshold which is currently £50,000. Before the ballot, Mr Johnson commented that he would raise the threshold to £80,000. Most contractors see this as a positive step in an economically difficult time as a large percentage pay the highest tax rate. Raising the threshold from £50k-80k will save some contractors around £3,000 per year.
Johnson May Not Be Able to Deliver
With Brexit to contend with and being in the middle of a Parliamentary Recess, some contractors feel Mr Johnson has too much to handle to prioritise contract work reform. Assuming the government survives the planned vote of no confidence in early September or is re-elected in a General Election that many anticipate before the end of 2019, it may be that Johnson and his team can never deliver the promises made so far.
Yet some feel that raising the higher rate of tax will stimulate the economy as Brexit uncertainty continues, helping business owners during an economically difficult time. Contracting is a preferred form of working for a growing number of people; the economic impact of Brexit on such businesses could be lessened with the intended reforms.
Johnson is Economical with the Truth
Trust in Boris Johnson and his administration is not high. Some feel he will be unable to deliver the promised contract law reforms; others feel Johnson has no intention of delivering. Trust is lowest among information technology contracting who feel that the new Prime Minister “does not value” their services.
They are not alone. Asked about big business’ concerns of a Hard Brexit in 2018, Mr Johnson replied with the f-bomb. He later refused to admit or deny saying those words.
This is a man who has lost his job twice for lying.
- The first time was from the newspaper The Times for inventing a quote about Edward II’s lover which he attributed to his godfather
- The second time he lied to then Conservative Party leader Michael Howard about an affair Johnson had with The Spectator columnist Petronella Wyatt
Johnson’s mistruths did not stop there. He continued to repeat a claim that the UK could save £39bn annually by leaving the European Union. The actual figure after weighing up rebates and other investment is far closer to £6.8bn per year.
Most recently, he claimed that EU red tape was strangling the British fishing industry through packaging regulation. Yet these regulations are British in origin that the European Union played no part in devising.
Boris Johnson is known for making unpredictable moves so it will be interesting to see what the future has to hold. It is encouraging to see that the new Chancellor of the Exchequer is on the side of contractors so the removal of IR35 is feasible. With Brexit fast approaching contractors must be ready to adapt.