'Contractor-friendly' tax plan given to Tory-DUP alliance

A blueprint for a ‘contractor-friendly’ tax system has been handed to Theresa May’s new minority government and its DUP backers.

Hoping to continue the theme of a fresh start, the blueprint calls for a range of measures but indicates no single proposal is more important than a change of mindset.

“First and foremost, attitudes towards the growing number of UK freelancers…must radically change when it comes to tax,” said Qdos, a status advisory, which drew up the blueprint.

“The vast majority of independent workers are not tax dodgers and do not choose to work this way to unfairly exploit the system.”

The advisory was referring to a raft of measures it said had targeted business soloists of late, such as a proposed but failed NICs hike; a tax increase on dividends and a tightening of IR35 in the public sector.

Even before those measures, Qdos has spoken up about other recent attacks on one-person businesses, such as the removal of the NI Employment Allowance for sole-director companies.

“It’s time tax worked for everyone,” said Qdos’ Seb Maley.

“And the government has a fresh opportunity to work with freelancers and contractors to build a fairer, smarter and simplified tax system -- and one which the independent workforce, the economy and government themselves will benefit from.”

Among the measures called for is a revoking of the dividend tax rise and a commitment not to extend April’s off-payroll rules (which toughened IR35 in the public sector) to the private sector.

The freelancer-friendly blueprint also specifies the need to align National Insurance with income tax, despite a full merger having previously been looked at and deemed difficult; both politically and practically.

However, Maley thinks it would be worthwhile in the long-term. “An ongoing commitment to aligning tax and national insurance contribution would simplify what has become a complicated tax system.”

He added: “With a number of different payments and deductions, aligning tax and NIC would play a huge part of reducing the growing administrative burden on businesses of all sizes.”