Autumn Budget 2024: UK contractor sector’s hopes, fears and expectations

Just 20-something days into her chancellorship, the UK’s new boss of HM Treasury, Rachel Reeves, has delivered a short but serious statement on how she plans to move forward – with controversial cuts to winter fuel allowances and the cancellation of mooted infrastructure projects, as well as large pay increases for many public sector workers.

As the chancellor now prepares for Autumn Budget 2024 on October 30th 2024, I want to outline three big policy areas which are critical to ensuring the continued growth and stability of the contracting, freelance and temporary sector.

It’s a sector which contributes hugely to the growth agenda and is of enormous benefit to UK plc, writes Chris Bryce, CEO of the Freelancer and Contractor Services Association.

1. Clarity and stability in tax legislation

One of our primary hopes is for Reeves to provide clarity and stability in tax legislation.

The frequent changes and uncertainties surrounding tax policies, such as the IR35 rules, have historically caused significant disruption for contractors and the firms supporting them.

As the Freelancer & Contractor Services Association (FCSA), we’ll be advocating for a clear, consistent, and fair tax regime that supports self-employment and entrepreneurship.

2. Support for training and upskilling

Our organisation would like to see measures that support training and upskilling for contractors.

This includes tax incentives for training expenditures and funding for professional development programs, as well as better targeting for the Skills & Apprenticeship Levy.

With the rapid technological advancements and changing market demands, ongoing training is essential for maintaining a competitive and skilled workforce in the freelance sector.

3. Recognition of the value of the temporary workforce

While the ‘New Deal’ proposed by Labour has many interesting aims, we urge the chancellor and her colleagues to take great care not to undermine this vital sector of the UK’s workforce.

We are actively engaged in discussions with government and will contribute to forthcoming consultations.

What chancellor Reeves shouldn’t unveil for UK contracting at Autumn Budget 2024

As Autumn Budget 2024 clearly has the potential to contain some unwelcome measures, we specify below what we hope chancellor Reeves refrains from announcing.

1. Increased tax burden

One of the FCSA's significant concerns is the potential for an increased tax burden on the workforce.

Previous Budgets have seen attempts to close perceived tax loopholes, which sometimes disproportionately affect the self-employed and temporary workers.

My fear is that new tax measures could further complicate the financial landscape of the contractor sector, making it harder for workers – and service providers - to operate effectively.

2. Unintended consequences of employment law changes

Changes in employment law, such as Labour's pre-election floated Single Worker Status and the party's earlier granting of worker protections, could have unintended consequences for umbrella companies and other service providers in the freelance sector, pushing up the amount they’d need to charge for their service.

While recognising that the current landscape may be confusing or uncertain, our concern is that poorly thought out changes might increase operational costs and reduce flexibility, potentially driving some businesses out of the market.

3. Neglect of contractor or freelance-specific issues

There is a risk at Autumn Budget 2024 that the unique challenges faced by freelancers, contractors and temporary workers get overlooked in favour of policies aimed at traditional employment models.

I would like to highlight to the chancellor the importance of recognising the distinct needs of this atypical, flexible, temporary labour sector.

We believe that any new ‘one-size-fits-all’ approach to labour market policy could be detrimental to this key sector.

What policy announcements does FCSA expect at Autumn Budget 2024?

1. Review and reform of IR35 legislation/ the off-payroll working rules

The Off-Payroll Working rules have long been a contentious issue for the freelance community.

FCSA expects the government to review and possibly reform the OPW rules to reduce complexity and ensure fair treatment.

We advocate for a system that accurately reflects the nature of freelance work without imposing undue burdens on contractors or businesses and recognises the contribution of contractors to growth in the UK.

2. Enhanced support for small businesses and startups

Our organisation expects the chancellor’s package on October 30th to include enhanced support for small businesses and start-ups, many of which rely on freelance or temporary talent.

This could take the form of tax breaks, grants, and other incentives that encourage the growth and sustainability of small enterprises.

3. Support for compliance and best-practice

Internally drawn up but affecting many operators in the contractor market today, FCSA’s accreditation process emphasises compliance with high standards of professional and ethical conduct.

My expectation is that the government will support initiatives that promote compliance and best-practices within the industry and bring forward sensibly framed regulation.

This could involve funding for compliance programs, partnerships with industry bodies, and recognition of accredited organisations.

4. Enforcement and policing

We have long been supportive of the formation of a properly resourced Single Enforcement Body to tackle employment malpractice, worker abuses, tax fraud and, importantly, promoters of unlawful tax avoidance schemes.

This new Labour government’s efforts to clamp down on such behaviour (via what it calls the Fair Work Agency) must be properly resourced, and have the capacity to ensure that those people and organisations operating lawfully are not placed at a competitive disadvantage to those which are not.