2020 – Upcoming Changes
IR35 Review
Our readers will, no doubt, be well aware from our previous newsletters that from 6th April 2020 IR35 is changing.
On 7th January 2020, to fulfil a commitment made by Chancellor Sajid Javid during the election campaign, the government launched a review of the forthcoming changes to the IR35 rules that are due to take effect on 6th April 2020. The aim of the review is to “gather evidence from affected individuals and businesses to ensure smooth implementation of the reforms”.
As part of the review, the Government will hold a series of roundtable meetings with those affected by the reforms, including contractor groups and medium and large-sized businesses. Furthermore, the Government will also carry out “further” internal analysis, which will include evaluation of the CEST tool and the experience of public sector bodies when implementing the off-payroll working rules in 2017.
Arguably a re-evaluation of the CEST tool seems somewhat futile, unless HMRC reconsider the significance of mutuality of obligations in the context of employment status. This certainly seems unlikely with the CEST tool having only been updated in November 2019 (see our newsletter here).
The review will conclude by mid-February 2020, which means that not only will there be uncertainty regarding the wording of the final legislation, which is now unlikely to be published until after the conclusion of the review, but also completion of such a review within approximately five weeks seems insufficient, given the complexity of the issues that IR35 continues to throw up.
Ultimately, and unfortunately, for those hoping for a delay in the implementation of these IR35 reforms, it seems that this review does little but reinforce the Government’s bulldozer approach in this regard. We therefore stress the importance of continuing to prepare for implementation of these reforms.
Key Information Documents
In tune with the various upcoming changes, from 6th April 2020, pursuant to the new Regulation 13A of the Conduct Regulations 2003 (the legislation can be found here), employment businesses will be required to provide a Key Information Document (KID) to a work-seeker (or if not the work-seeker, the person supplied to carry out the work). Our previous newsletters on KIDs can be found here (March and October 2019).
From a practical and commercial perspective KIDs introduce a new dynamic to how employment businesses and umbrella companies will work. Practically, KIDs are required to be given to the work-seeker by the employment business at first instance. Some of the information required for a KID will need to be provided by the umbrella company in many circumstances. This means that umbrella companies will need to ensure they are ahead of the game, ensuring that their employment business clients have what they need to be compliant.
For more information on KIDs, including the Chartergate’s explanatory guide, please contact Zubair Ahmed.
Regulation 10 Contracts (AWR)
6th April 2020 will also mark a change for the Agency Workers Regulations 2010 (AWR), whereby Regulations 10 and 11 will be repealed, resulting in the abolition of pay between assignments (these are also known as Swedish Derogation Contracts or Reg 10 contracts).
The legislation for this can be found here.
Questions concerning how individuals can be engaged following the abolition of Reg 10 contracts as well as what types of engagements fall within the AWR will need to be addressed. Issues concerning the termination of Reg 10 contracts will also surface.
For more information on the abolition of Reg 10 contracts and future engagement options, including the Chartergate’s technical analysis of the change please contact Mark Taylor.
2020 Budget
Finally, following the December 2019 election, Chancellor Sajid Javid has announced the date of the next budget as 11th March 2020. Whilst the Chancellor has promised to kickstart a decade of renewal, this will be the UK’s first budget as a non-EU member state (the proposed Brexit date is 31 January 2020) and against a backdrop of what was regarded as subpar economic growth in 2019. As such, some of the key areas likely to be targeted by the Chancellor are as follows:
- National Insurance (NI) – During the election campaign, the Tories pledged to raise the NI threshold to £12,500. In the March 2020 budget, the NI threshold is expected to increase from the current £8,632 to £9,500 – and will then be increased until it is eventually £12,500.
- National Living Wage (NLW) – The Government has already announced that the NLW will increase from £8.21 to £8.72 an hour from April 2020. However, the Chancellor may confirm an increase to around £10.52 an hour from 2024.
- Capital Gains Tax – The Government plans to implement significant changes to Capital Gains Tax, specifically regarding lettings relief and Principal Private Residence.
- IR35 – As per the above, the Government plans to introduce new legislation from April 2020 to help tackle the perceived abuse of tax and national insurance contributions relating to off-payroll labour in the private sector.
We will of course report in more detail on the budget in March 2020!
Further Advice
In addition to the areas discussed in this newsletter, there are various other upcoming changes in April 2020 including to the written statements of particulars, and to the Working Time Directive (holiday pay calculations). Beyond April 2020, in the world of VAT, the Domestic Reverse Charge for Building and Construction Services is due to take effect in October 2020.
If you would like further advice or assistance on any of these upcoming changes, please contact a member of the Chartergates’ Team.