By: Chris Shepherd

Where do the major political parties stand on IR35?

With a general election nearly upon us, the major political parties have been busy outlining their plans for the UK, which they’ll put into action should they secure enough votes on 12th December to form a Government.

From Brexit promises to NHS pledges and tax plans, the Conservatives, Labour and the Liberal Democrats have now all unveiled their manifestos as they look to win support before the big day.

One issue that could determine whether UK freelancers and contractors vote for one party or another is IR35 - the legislation that was introduced in 2000 with the aim of stopping contractors working as ‘disguised employees’.

Set to be reformed in the private sector on 6th April 2020 (as it was in the public sector in 2017), contractors are concerned that further IR35 changes will result in them being wrongly classed as ‘employees for tax purposes’ by their clients, meaning they will be taxed as employees rather than as self-employed individuals.

Given the importance of IR35 to contractors - and the lobbying body IPSE thinks it could be key to winning a significant percentage of the UK’s entire self-employed vote - politicians have had no choice but to sit up and take notice of it.

In this article, we’ll take a look at where Boris Johnson, Jeremy Corbyn and the Liberal Democrat leader, Jo Swinson, stand on this sometimes complicated tax legislation.

The Conservative Party

IR35 did not appear in the Conservative Party manifesto, much to the dismay of contractors. However, on the whole, independent workers didn’t seem too surprised. Bear in mind that it was a Conservative government that came up with the idea of IR35 reform.

That said, since then, the Chancellor has promised to review IR35 - a pledge he made while speaking on BBC Radio 4 programme, Money Box, before reiterating in a Tweet. The news was welcomed by contractors and industry commentators, with the general consensus that committing to a review of IR35 - which will be part of a bigger review into self-employment - is at least a step in the right direction.

But will it be enough to rebuild the relationship between contractors and the existing government? Or is it too little too late? Only time will tell.

The Labour Party

You might recall that a Labour government introduced IR35 nearly two decades ago. So many contractors, as you can imagine, have been sceptical about the Labour’s commitment to supporting the independent workforce since.

In the years that have passed, Labour’s view of IR35 doesn’t seem to have shifted much. Like the Conservatives, Jeremy Corbyn and his team failed to reference IR35 in the party manifesto, which, as you can imagine, didn’t go unnoticed by contractors.

However, when asked about IR35 reform at IPSE’s 2019 General Election Hustings, Labour MP Bill Esterton, said: “We absolutely can’t see it rolled out into the private sector the way things are at the moment.” Then, in response to being asked on Twitter whether it was Labour policy to review IR35 changes, in a Tweet that has now been deleted, the MP for Sefton Central wrote: “Absolutely.”

So, with less than one week to go until election day, has Jeremy Corbyn missed a trick in not promising to review the IR35 rules? And will this result in the Labour Party losing potential contractor votes? We won’t need to wait long to find out.

The Liberal Democrat Party

Refreshingly, an IR35 review makes up part of Jo Swinson’s ambition to create a fairer tax system. The Liberal Democrat manifesto details plans to “end retrospective tax changes like the loan charge brought in by the Conservatives, so that individuals and firms are treated fairly, and review recent proposals to change the IR35 rules.”

The fact that the Liberal Democrats also intend to end the controversial Loan Charge, in addition to reviewing IR35 reform, has been well-received by contractors. And because the Lib-Dems did not introduce the legislation (Labour) or reforms (Conservatives), a number of contractors feel a potential review would be a genuine one. However, whether this will convince independent workers to vote for the party remains to be seen.

Of course, other political parties have released their manifestos too. Much like the Liberal Democrats, The Scottish National Party has said it would review “the tax rules around intermediaries – known as the IR35 tax rule - and problems with implementation of the Loan Charge.”

With the election closing in, that IR35 is a topic of conversation for the major parties signals the importance of the UK’s 5 million self-employment workforce that, in IPSE’s opinion, could play a deciding role in who wins the race for Number 10.

Update: at the time this article was written, the off-payroll (IR35) reforms were due to be implemented on the 6th April 2020. On the 17th March 2020, the UK government announced that it would be deferring the reforms to the 6th April 2021 to help businesses and individuals during the COVID-19 crisis.

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