Top 4 Spring Budget 2024 announcements IT contractors want to see

As Spring Budget 2024 fast-approaches in this election year, there are a number of areas which the IT sector’s agencies and contractors want to see the chancellor address, writes Tania Bowers, global public policy director of the Association of Professional Staffing Companies (APSCo)

Across the UK, both of these parties - but particularly contractors - will be keeping an eye out for the following four key announcements on March 6. For being able to give contractors a well-deserved boost, and support their careers, agents will likely back these four too.

1. Legislation to define ‘self-employment’

The flexible labour market is significantly complex in its makeup.

It is impossible to legislate for all those in temporary work under one banner and we have long called for self-employment to be clearly defined in law to recognise this fact.

Professional contractors are often highly skilled, highly productive workers who should be encouraged to remain in the workforce until retirement.

In order to encourage this long service, the current complexities of employment status definitions for tax and employment rights need to addressed. We’ve called on chancellor Jeremy Hunt to define ‘self-employed’ in legislation which clearly recognises the differences between professional contractors; those more dependent workers and those within the gig economy who are often exposed to greater risks.

Any reforms should also outline the perimeters of running a business and professional self-employment as both are different and should be regulated as such. It’s critical that this flexible part of the labour market are offered the right financial support and motivation to allow them to thrive.

It is important to note, though, that we are approaching the need for regulation on the self-employed from a different direction to the Labour party, and our recommendations should be viewed in isolation.

Our crucial aim is that it should be clear in legislation what professional self-employment is, making it more straightforward to identify a contractor running their own business and working on an assignment independently.

We hope that such legislative clarity would render much of the off-payroll working legislation unnecessary, and boost the economy by giving both clients and contractors the confidence to contract.

2. Keep off-payroll under constant review

Off-payroll working (as a framework) has had a detrimental impact on the highly skilled contractor landscape for some time, and we have recommended that Budget 2024 includes a more comprehensive review of the OPW legislation.

The lack of legal clarity around highly skilled corporate self-employment creates false deemed employment, which is unfair to those on truly contract assignments.

It is positive that the ineffectiveness of IR35 remains a live political issue, with the New Conservatives faction of the Conservative party calling to abolish the off-payroll reforms, and return to the pre- April 2017 situation. We support this as it will boost productivity, encourage contractors back into the labour market and relieve clients and recruiters of their off-payroll responsibilities and liabilities.

However, ultimately IR35 is bad law, which is only further highlighted by the spate of high-profile enforcement cases that we’re seeing. Only reform of employment status law will lead to the long-term certainty that is needed.

3. The regulation of umbrella companies

It’s unfortunate that there is still a minority number of umbrella companies that do abuse the system.

We welcome the government’s recognition that compliance is needed in this remit, and we hope Spring Budget 2024 will be used to update the legal definition of umbrella employment and introduce appropriate licensing of this market.

It should, however, be noted that it is unlikely that there will be any such legislation in this parliament, even if the response to the umbrella market regulation consultation is published in the spring.

In the absence of legislation, contractors do have access to a lot of clearly written government guidance on gov.uk as well as many umbrella companies audited by APSCo, FCSA and Professional Passport. So, contractors must continue to take steps to protect themselves and dramatically reduce their risks of exposure to tax avoidance, in the absence of formal, umbrella sector regulation.

4. An exemption for highly skilled contractors from AWR

The Agency Workers Regulations (AWR) do not apply to individuals in-business-on-their account. However, there is no formal “opt out” unlike the Conduct Regulations 2003.

In addition, and importantly, many highly skilled, well-paid contractors are within scope by way of employment by umbrella companies. This creates red tape and protection these contractors neither want nor need.

The AWR needs to be updated to exclude professional highly paid contractors whose earnings are significantly above National Minimum Wage. As it is currently written, AWR creates unnecessary and complex administrations that can be detrimental to the professional contract market.

And finally, don’t place your bets but…

It is not clear which of the above four measures we’d like to see are more likely or less likely to be included in the Spring Budget on Wednesday March 6th, but all are somewhat linked and all should be given appropriate consideration.