2016 was an eventful year for the UK economy and for contracting with several legislative changes and political and economic events such as the Brexit vote. These events are likely going to affect contractors, freelancers and the self-employed in both public and private sectors during 2017.
A new year of change, especially for the public sector
The sprouts are a distant memory, decorations are down and the resolutions are made and our thoughts now turn to what the next twelve months will have in store. 2016 was a year of changes in legislation affecting contractors and 2017 promises to bring even more change, especially for the public sector.
Undoubtedly this is the biggest change to the way that contractors work post April and will have immediate effect on those providing services to the public sector. We’ve written about this before and some have predicted the death of public sector contracting as a result of the responsibility of ensuring tax compliance for Limited Company contractors being placed on the clients, rather than the contractors.
There have been whispers suggesting that given that the digital tools that are to be used to enforce the changes are not ready, there might be a delay in bringing these changes into force however there is nothing coming from HMRC to suggest any delays.
It remains to be seen exactly what the effect will be on the public sector as a whole – will there be mass walkouts? All we can say at the moment is that as a company, we are seeing the beginnings of migration from Limited to Umbrella for some agencies and clients.
We will keep a watching brief and issue updates as things happen.
Changes in the private sector
Whether or not the above changes will eventually roll out to the public sector remains to be seen and we would not put it past HMRC to impose the same changes on public sector contractors in April 2018.
Indeed the changes above could have an effect on the private sector sooner than then – if there is a mass migration of contractors from the public sector to the private sector then there will be far more competition for roles and might lead to a lowering of rates.
The Chancellor has committed to decreasing the rate of Corporation Tax from its current level of 20% to 17% by 2019. April sees the first of the planned reductions to 19% and this will provide contractors who are still able to operate via a limited company with a small increase in their income.
More opportunities are coming
Despite the doom and gloom around taxation changes, there are positives to look forward to in 2017.
According to Manpower, hiring optimism is on the rise, even in the face of Brexit and the rising costs of taking on non-UK workers. There is already a skills shortage in the construction and IT industries and given the Chancellor’s commitment to increase spending on infrastructure promised in the Autumn Statement, we would expect demand for contractors to rise over the next twelve months.
What can One Click do?
The One Click Group provide Limited Company Accountancy and a range of employment services for contractors. We are experts in our field and can give advice on what option is best based on a contractor’s individual circumstances. We always have our eyes on legislation and can provide advice to recruitment agencies and clients.